TDS and TCS Threshold Changes from 1 April 2025: What Small Businesses Must Update

If you deduct TDS on rent, commission, professional fees, or interest, several of your thresholds went up on 1 April 2025 — which means fewer small payments now trigger a deduction. The Finance Act, 2025 raised TDS limits across half a dozen sections, removed TCS on the sale of goods entirely, and lifted the TCS threshold on foreign remittances (ClearTax, 2025). Here is the before-and-after, section by section.

Which TDS thresholds went up?

Six common deduction thresholds were raised so routine small payments stop triggering TDS (TaxGuru, 2025). The biggest jump is rent: a landlord paid up to ₹6 lakh a year now sees no TDS at all, where the old cut-off was ₹2.4 lakh. For a small business renting an office or shop, that often removes the TDS obligation outright.

What happened to TCS on the sale of goods?

Section 206C(1H) — the 0.1% TCS that sellers with turnover above ₹10 crore collected on sales above ₹50 lakh to a buyer — was omitted from 1 April 2025 (TaxGuru, 2025). It overlapped with Section 194Q (TDS on purchase of goods, which stays), so removing it cuts duplicate compliance. If you were collecting this TCS, stop — but keep deducting under 194Q where it applies.

Did the foreign remittance (TCS) limit change?

Yes. The TCS threshold on remittances under the Liberalised Remittance Scheme and on overseas tour packages rose from ₹7 lakh to ₹10 lakh, and TCS on remittances for education funded by an education loan was removed entirely (AU Small Finance Bank, 2025). If you send money abroad for a child's education, a family trip, or investments, more of it now flows without upfront tax collection.

What is the new Section 194T?

Section 194T is genuinely new for partnership firms and LLPs: from 1 April 2025 they must deduct 10% TDS on remuneration, salary, commission, bonus, or interest paid to a partner once the aggregate crosses ₹20,000 in a financial year (ClearTax, 2025). Once the threshold is crossed, TDS applies to the whole amount, not just the excess. A partner's share of profit (exempt under Section 10(2A)) and capital drawings are outside its scope. (Section 194T was inserted by the Finance (No. 2) Act, 2024 and became effective 1 April 2025.)

Frequently Asked Questions

I pay ₹45,000 a month as office rent. Do I still deduct TDS?

Under the new Section 194I threshold of ₹6,00,000 per year (₹50,000 per month) effective 1 April 2025, rent of ₹45,000 a month — ₹5,40,000 a year — falls below the limit, so no TDS is required. Under the old ₹2.4 lakh threshold you would have had to deduct. Always confirm the annual total against the ₹6 lakh ceiling.

Do I still collect TCS on goods I sell above ₹50 lakh?

No. Section 206C(1H), the TCS on sale of goods, was omitted from 1 April 2025. Sellers no longer collect it. However, if your buyer is liable to deduct TDS on the purchase under Section 194Q, that obligation continues, so coordinate with large buyers on who is deducting.

My firm pays partners a monthly remuneration. What do we do now?

From 1 April 2025, deduct 10% TDS under Section 194T once the total remuneration, interest, bonus, or commission paid to a partner crosses ₹20,000 in the year. Get the firm a TAN if it does not have one, deduct on crossing the threshold, and deposit and report the TDS like any other deduction.

Did the professional fees TDS threshold change?

Yes. The Section 194J threshold for professional or technical fees rose from ₹30,000 to ₹50,000 per year, effective 1 April 2025. Payments to a professional below ₹50,000 in the year no longer attract TDS, reducing paperwork for small one-off engagements.

What should you do next?

Update your accounting software's TDS masters with the new thresholds, tell your team to stop collecting TCS on goods, and if you run a firm or LLP, set up Section 194T deductions on partner pay. Getting these wrong means either over-deducting and annoying vendors, or under-deducting and facing interest and disallowance. For help, see Bizeract TDS return filing and bookkeeping services.