The Union Budget 2025 has introduced key changes to TDS (Tax Deducted at Source) thresholds, aiming to reduce compliance burdens and enhance cash flow for individuals and businesses. These changes take effect from April 1, 2025, and affect several important sections under the Income Tax Act, 1961.
Here’s a breakdown of the latest TDS threshold updates, their practical implications, and who stands to benefit.
1. Section 194A – Interest on Deposits
What is Section 194A?
Section 194A deals with TDS on interest income from banks, post offices, and cooperative societies (excluding interest on securities).
2025 Update at a Glance
| Particulars | Old Threshold (FY 2024-25) | New Threshold (From FY 2025-26) |
|---|---|---|
| Annual Interest Limit | ₹40,000 | ₹50,000 |
| For Senior Citizens | ₹50,000 | ₹50,000 (unchanged) |
| TDS Rate | 10% | 10% |
Who Benefits?
- Individual depositors with moderate savings.
- Senior citizens, who already enjoy the ₹50,000 limit.
- People earning interest from:
- Bank FDs and RDs
- Cooperative bank accounts
- Post office deposits
Key Takeaway
Less frequent TDS deductions → Improved liquidity and reduced compliance hassle.
2. Section 194I – Rent Payments
What is Section 194I?
This section governs TDS on rent paid for land, building, furniture, or machinery exceeding a specified amount.
2025 Update at a Glance
| Particulars | Old Limit | New Limit (From April 2025) |
|---|---|---|
| Monthly Rent Threshold | ₹20,000 | ₹50,000 |
| Annual Threshold | ₹2,40,000 | ₹6,00,000 |
| TDS Rate | 10% | 10% |
Who Benefits?
- Small landlords and property owners
- Tenants of commercial or residential spaces
- Businesses renting property at moderate values
Impact Summary
- 150% increase in the annual threshold
- Exemption for small landlords from TDS hassles
- Simplified TDS compliance for tenants
3. Section 194J – Professional & Technical Services
What is Section 194J?
This section covers TDS on professional fees, technical services, royalty, and other specified services exceeding a certain threshold.
2025 Update at a Glance
| Particulars | Old Limit (FY 2024-25) | New Limit (From FY 2025-26) |
|---|---|---|
| Annual Payment Threshold | ₹30,000 | ₹50,000 |
| TDS Rate | 10% | 10% |
Services Covered
- Chartered Accountants (CAs), lawyers, consultants
- Technical and IT service providers
- Royalties and advertising agencies
Business Benefit
- Reduced TDS compliance for small businesses and freelancers
- Less paperwork for startups and service-based MSMEs
4. Section 194T – New Section for LLPs and Partnerships
What is Section 194T?
Introduced in Budget 2024, Section 194T mandates TDS on payments made to partners by LLPs and partnership firms.
Key Provisions
| Particulars | Applicability |
|---|---|
| Annual Payment Threshold | ₹20,000 |
| TDS Rate | 10% |
| Applicable Entities | LLPs and Partnerships |
| Beneficiaries Affected | Partners receiving income (excluding share of profit) |
Purpose & Impact
- Prevents tax leakage in partnership setups
- Ensures tax compliance on remuneration, interest on capital, or other payments to partners
Summary Table: Revised TDS Thresholds 2025
| Section | Nature of Payment | Old Threshold | New Threshold | TDS Rate |
|---|---|---|---|---|
| 194A | Interest Income | ₹40,000 | ₹50,000 | 10% |
| 194I | Rent Payment | ₹20,000/month | ₹50,000/month | 10% |
| 194J | Professional/Technical Fees | ₹30,000 | ₹50,000 | 10% |
| 194T | Payments to Partners (LLPs) | New Section | ₹20,000 | 10% |
Why These TDS Changes Matter in 2025
- Ease of compliance for small taxpayers
- Improved cash flow for professionals, landlords, and depositors
- Better targeting of TDS to high-value transactions
- Support for MSMEs, startups, and freelancers
- Reduced paperwork and administrative cost
📚 FAQ – People Also Ask
What is the TDS threshold for bank interest income in FY 2025-26?
₹50,000 per year for all individuals (senior citizens already had this threshold). Applies to interest from banks, post offices, and cooperative banks.
Do I need to deduct TDS on rent under ₹50,000 per month in 2025?
No, as per the amended Section 194I, no TDS is required if monthly rent does not exceed ₹50,000 from April 1, 2025.
Is TDS applicable on professional fees below ₹50,000 in FY 2025-26?
No, TDS under Section 194J will only apply if the annual payment exceeds ₹50,000.
What is Section 194T and who needs to comply?
Section 194T is a new section introduced for partnership firms and LLPs. If they pay more than ₹20,000 annually to a partner (excluding profit share), they must deduct TDS at 10%.
Conclusion
The TDS threshold revisions in Budget 2025 are a welcome move for individuals, professionals, and small businesses. These updates align with the government’s broader goals of easing compliance, improving transparency, and enhancing cash flow in the economy.
Whether you’re a CA, tenant, freelancer, or small firm, understanding these updates will help you plan better for FY 2025-26.
