Post-Budget Impact: Streamlining TDS & TCS for Easier Compliance and Liquidity By Mr. Harsh Bhuta, Partner, Bhuta Shah and Co LLP
Below the Post-Budget Impact: Streamlining TDS & TCS for Easier Compliance and Liquidity By Mr. Harsh Bhuta, Partner, Bhuta Shah and Co LLP
The proposed changes in TDS and TCS under the Finance Bill, 2025, mark a significant shift towards a more streamlined and taxpayer-friendly regime. The removal of TCS on educational remittances alleviates financial strain on parents and students, ensuring seamless fund transfers without the hassle of reclaiming tax credits. Increasing TDS thresholds for interest (doubled for senior citizens), dividends (doubled), and rent (enhanced from 2.4L p.a to 6L p.a) simplifies compliance, benefiting small investors, senior citizens, and landlords by improving cash flow and reducing unnecessary deductions.
For businesses, reduced TDS rates on insurance commissions (now 2%) and securitization trusts (now 10%) enhance liquidity and ease administrative burdens. By aligning tax collection with actual tax liabilities, these reforms not only minimize excessive deductions but also reduce dependency on refunds.
However, strategic planning is crucial. Taxpayers must update compliance processes, ensure correct documentation to leverage the revised liberalised provisions.
Overall, these reforms reflect a progressive approach by the government to simplify taxation, reduce compliance burdens, and enhance liquidity for both individuals and businesses, making tax administration more efficient and equitable.
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