A country is made up of several systems and components which contribute toward its growth and development and one of those systems is the taxation system. Like every other country, India has also established a firm taxation system to collect revenue from people, business entities, and others for the nation’s development.
Recently, the government of India announced some significant changes in the rules of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). The changes are being introduced to make the tax system much more organised and efficient.
Read the article to learn more about the changes introduced in the TDS and TCS, date of implementation, and other important details.
Changes In TDS & TCS Rules
The central government through the budget announced several key changes in the existing tax system, specifically in the rules of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). The changes are being introduced with just one aim and that is to make the taxation system fair for all, individuals and traders.
All the changes in the rules of TDS and TCS are described below in detail for one’s better understanding and reference.
1. New Limits Of TDS
In the old system, TDS was deducted from people’s accounts when they reached a certain bar of cash inflow due to a variety of reasons like interest earned from the bank. However, this year’s budget has proposed to eliminate this bar. This would be very beneficial for people as a chunk of their income won’t be deducted whenever they earn.
2. Sending Money Abroad
Earlier, people were required to pay TCS if they wanted to transfer more than 7 lakh Rupees to someone’s account abroad. In the new system, this limit has been proposed to be increased to 10 lakh Rupees. Also, if the money is being set for educational purposes, no TCS will be charged.
3. TCS On Sales Of More Than 50 Lakh Rupees
Under the new system, if traders or businessmen make a sale of more than 50 lakh Rupees, no TCS will be deducted from their incomes.
4. Tax Returns
In the old system, a higher percentage of TDS and TCS were deducted if an individual failed to file their Income Tax Return (ITR) on time however as per the new system, this will be eliminated to save people from paying higher tax rates.
5. Delays In Paying TCS
Earlier, people who failed to pay TCS to the government on time were sentenced to imprisonment for a period of 3 to 7 months along with a fine. However, under Budget 2025, this is being changed to no legal action if the person pays within the stipulated time.
Conclusion
The changes announced in the rules of TDS and TCS through the budget aim to make the tax system efficient and friendly to the taxpayers. The new changes would shield them from paying unnecessary tax amounts and earn fruitfully in the country.
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