Overview of TCS Amendments
The Union Budget 2025 has implemented several key modifications to the Tax Collected at Source (TCS) regulations, effective from April 1, 2025. These changes are designed to streamline tax compliance and reduce the burden on businesses and individuals.
Removal of TCS on Sale of Goods
One of the most notable amendments is the removal of TCS provisions under Section 206C(1H) related to the sale of goods. Previously, sellers were required to collect TCS at 0.1% on sales exceeding ₹50 lakh in a financial year. This requirement often led to complexities, especially when both TDS and TCS applied to the same transaction. The elimination of this provision is expected to ease compliance burdens for businesses. citeturn0search4
Revised TCS Rates and Thresholds
The Finance Bill 2025 has proposed adjustments to existing TCS rates and thresholds for specific transactions. Key changes include:
| Section | Nature of Transaction | Existing TCS Rate | New TCS Rate (from April 1, 2025) |
|---|---|---|---|
| 206C(1) | Timber and forest produce under a forest lease or otherwise | 2.5% | 2% |
| 206C(1G) | Remittance under Liberalised Remittance Scheme (LRS) for education, financed by a loan from financial institutions | 0.5% after ₹7 lakh | Nil (Threshold increased to ₹10 lakh) |
Impact on Businesses and Taxpayers
These amendments are anticipated to simplify tax compliance procedures and reduce the administrative burden on businesses. By eliminating overlapping provisions and increasing threshold limits, the changes aim to create a more straightforward and efficient tax collection system.