NEW DELHI: The government has proposed increasing the annual threshold for Tax Deduction at Source (TDS) on rent from the current Rs 2.4 lakh to Rs 6 lakh, Finance Minister Nirmala Sitharaman announced in her Budget 2025 speech on Saturday.
“I propose to rationalise Tax Deduction at Source (TDS) by reducing the number of rates and thresholds above which TDS is deducted.Further, threshold amounts for tax deduction will be increased for better clarity and uniformity,” Sitharaman said.
She further stated, “The annual limit of Rs 2.40 lakh for TDS on rent is being increased to Rs 6 lakh.” The move aims to reduce the number of transactions subject to TDS, providing relief to small taxpayers receiving smaller rental payments.
As per the Budget document, Section 194-I of the Income Tax Act mandates that entities, excluding individuals and Hindu Undivided Families (HUFs), must deduct TDS on rental income paid to residents if it exceeds the specified limit. With the revision, tax deduction will now be required only when rental payments exceed Rs 50,000 per month.
The proposed change is expected to simplify compliance and reduce the tax burden on small-scale landlords while maintaining tax efficiency.
Govt proposes hike in TDS threshold on rent to Rs 6 lakh from Rs 2.4 lakh
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