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Budget 2025: TDS Rationalization for Senior Citizens to Bring Major Relief for Taxpayers, Check Details

Budget 2025: The Finance Minister, in the Budget 2025 announcement, has introduced significant changes to Tax Deducted at Source (TDS) regulations, aiming to simplify tax compliance and provide relief to taxpayers.

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Neha Kumari
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Budget 2025

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The Finance Minister, in the Budget 2025 announcement, has introduced significant changes to Tax Deducted at Source (TDS) regulations, aiming to simplify tax compliance and provide relief to taxpayers. One of the major highlights is the rationalization of TDS rates, along with an increase in the tax deduction limit for senior citizens and amendments to salary-based TDS calculations.

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TDS Relief for Senior Citizens and Renters

To benefit senior citizens, the government has doubled the limit for tax deduction on interest income from the existing ₹50,000 to ₹1 lakh. Additionally, the TDS threshold for rent payments has been raised to ₹6 lakh, reducing tax burdens for individuals with rental income.

Mandatory Adjustments for Non-Salary Income from October 2024

From October 1, 2024, employers will be required to factor in TDS/TCS deducted on non-salary income while computing the TDS on an employee’s salary. This amendment ensures that salaried employees receive appropriate tax relief by adjusting taxes already paid through other income sources, preventing excess TDS deductions. While the law was implemented earlier, backend technical updates delayed its execution.

Key Amendments in TDS Forms (24Q, 26Q, and 27EQ)

The government has introduced various modifications in tax forms to streamline TDS deductions:

New Column 388A in Form 24Q: A new column (388A) has been added under Annexure II (Salary Details) to report tax deducted at source (TDS) or tax collected at source (TCS) on non-salary income under Section 192(2B). This will be applicable from Q4 of FY 2024-25.

Increase in Standard Deduction: The standard deduction for salaried taxpayers under the new tax regime has been increased from ₹50,000 to ₹75,000, effective from Q4 of FY 2024-25.

Column Name and Number Changes: Some modifications have been made in column names and numbering in Form 24Q (Annexure II - Salary Details), effective from Q4 of FY 2024-25.

Omission of Section Code 194F: Section 194F has been removed from Form 26Q, applicable from Q3 of FY 2024-25 onwards.

Impact of TDS Amendments on Employees

According to Ashish Niraj, Partner at A S N & Company, Chartered Accountants, these amendments will improve the accuracy of TDS deductions. Employees will be required to furnish details of other income more accurately, allowing for precise TDS calculations. The new changes will also account for losses under "Income from House Property," ensuring a more accurate tax deduction process based on individual cases.

These reforms are expected to simplify TDS compliance, provide tax relief to individuals, and enhance overall tax transparency.

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