New TDS & TCS Rules for 2025 – Salary, Rent, Freelancers & E-Commerce

Aug 29, 2025

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India’s Budget 2025 has brought significant changes to the TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) framework, effective from April 1, 2025. These revisions aim to simplify compliance, reduce tax deducted upfront, and ease the burden for individuals, freelancers, landlords, and e-commerce participants.

1. TDS on Salaries

TDS on salary continues to be deducted by employers based on the employee’s chosen tax regime and applicable income tax slabs. While there is no new TDS rule for salaries, the revised tax slabs and higher rebate under Section 87A will result in more take-home salary for many taxpayers.

2. TDS on Interest & Dividends

Interest on securities – Now exempt up to ₹10,000.
Interest from banks, co-operative societies, and post offices:
- Senior citizens: threshold raised from ₹50,000 to ₹1,00,000.
- Other taxpayers: threshold raised from ₹40,000 to ₹50,000.
- Miscellaneous cases: raised from ₹5,000 to ₹10,000.
Dividends & mutual funds – TDS threshold doubled from ₹5,000 to ₹10,000.

3. TDS on Rent

The annual rent threshold for TDS deduction has been increased from ₹2.4 lakh to ₹6 lakh, giving relief to small landlords and tenants.

4. TDS on Professional & Freelance Fees

Freelancers and professionals will now face TDS only if a single payment exceeds ₹50,000, up from the earlier threshold of ₹30,000. This change improves cash flow for independent professionals.

5. TDS on Commission & Brokerage

For commission and brokerage, the TDS rate has been reduced from 5% to 2%, and the exemption threshold has been increased to ₹20,000.

6. TCS on Remittances, Foreign Payments & E-Commerce

For foreign remittances under the Liberalized Remittance Scheme (LRS) and for overseas tour packages, the TCS threshold has increased from ₹7 lakh to ₹10 lakh.
Payments for foreign education funded through loans are now exempt from TCS.
TCS on high-value goods (e.g., luxury vehicles above ₹10 lakh) continues, but with clearer limits.

7. Simplification of TDS/TCS Structure

The new Income Tax Bill consolidates the framework: instead of nearly 69 separate provisions earlier, only 13 simplified sections will remain. This reduces duplication and makes it easier for taxpayers and businesses to comply.

8. New Provisions for Digital Economy

A new section, 194T, has been introduced to cover emerging income streams in the digital economy. This aims to bring new-age business models under the TDS net.

Summary Table

Income Type / Source	Old Threshold / Rate	New Threshold / Rate
Salaried Income	As per tax slabs	No change; only slabs updated
Interest (Senior Citizens)	₹50,000	₹1,00,000
Interest (Others)	₹40,000 / ₹5,000	₹50,000 / ₹10,000
Interest on Securities	Not specified	₹10,000 exemption
Dividends & Mutual Funds	₹5,000	₹10,000
Rent	₹2.4 lakh	₹6 lakh
Professional / Freelance Fees	₹30,000	₹50,000
Commission / Brokerage	₹15,000 @ 5%	₹20,000 @ 2%
LRS Remittance / Tour Packages (TCS)	₹7 lakh	₹10 lakh (loans exempt)
TDS/TCS Sections	69 fragmented provisions	13 simplified provisions

10 Exam-Style Questions & Answers

Q: What is the revised TDS threshold for senior citizens on interest income?
A: ₹1,00,000 per year.
Q: At what annual rent amount does TDS apply from April 2025?
A: ₹6 lakh.
Q: What is the new TDS threshold for professional and freelance fees?
A: ₹50,000.
Q: What is the TDS threshold for dividends and mutual fund payouts?
A: ₹10,000.
Q: What is the revised TDS rate for commission and brokerage?
A: 2% (reduced from 5%).
Q: What is the TCS threshold for foreign remittances and tour packages?
A: ₹10 lakh (increased from ₹7 lakh).
Q: Is TCS applicable on foreign education loans?
A: No, such remittances are exempt.
Q: How many TDS/TCS sections will remain in the new Income Tax Bill?
A: 13 simplified sections.
Q: Does TDS on salaries change in 2025?
A: No, only tax slab and rebate changes apply.
Q: Which new section has been introduced for the digital economy?
A: Section 194T.

Conclusion

The new TDS and TCS rules for 2025 simplify compliance, provide relief to landlords, freelancers, and senior citizens, and bring clarity for e-commerce and global transactions. With higher exemption thresholds and reduced rates, taxpayers will benefit from better liquidity and less administrative burden.

Disclaimer

This article is for educational purposes only. Tax laws are subject to amendments, and their application may vary based on individual circumstances. Readers should consult a qualified tax professional or refer to official government notifications before making financial decisions.