New Delhi: Finance Minister Nirmala Sitharaman on Saturday presented the Union Budget for the financial year 2025-26. Giving a big relief to investors and taxpayers in Budget 2025, she has increased the limit of TDS on dividend income from Rs 5,000 to Rs 10,000 per financial year. This will provide relief to small investors in tax deduction and will also reduce their tax burden.
TDS will not be deducted on income up to 10 thousand
Till now, it was mandatory for companies to deduct TDS at the rate of 10% on dividends above Rs 5,000. But under the new provision, there will be no TDS on dividends up to Rs 10,000. If the investor has provided PAN, then 10% TDS will be deducted on dividends above the new limit, but if PAN is not provided, TDS will be deducted at a higher rate of 20%. The government believes that this decision will directly benefit small investors and mutual fund unit holders. Apart from this, the process of tax payment will also be simplified.
Changes in TDS and TCS rates bring relief to taxpayers
In the budget presented for the financial year 2025-26, not only dividend income but many other rules related to TDS and TCS have also been changed and made easier.
- In fact, under section 194A, the limit of TDS on interest received on bank deposits of senior citizens has been increased from Rs 50,000 to Rs 1 lakh.
- At the same time, the limit of TDS on rent under section 194I has been increased from Rs 2.40 lakh per annum to Rs 6 lakh without any condition.
- The TCS limit on sending money abroad under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India has been increased from Rs 7 lakh to Rs 10 lakh.
- If money is sent abroad by taking a loan from the bank for studies, then TCS will not be levied on it.
Government will present new income tax bill next week
The government says that these changes in the rules of TDS and TCS have been made to simplify the tax system and help small investors. This will give investors tax relief on dividend, rent and interest, which will reduce their tax liability and increase investment. It is worth noting that after the budget, everyone’s eyes will now be on the new Income Tax Bill, which the government is going to present in the Parliament next week.
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