The Indian tax landscape has undergone significant changes with the implementation of new Tax Deducted at Source (TDS) rules from April 1, 2025. These changes, announced in Budget 2025, aim to simplify compliance procedures and reduce the administrative burden on businesses while maintaining effective tax collection mechanism.
The most significant changes include the removal of punitive sections for non-filers, enhanced threshold limits for various transactions, and streamlined compliance procedures. These modifications represent a shift towards a more business-friendly tax environment while ensuring systematic tax collection.
The government has completely omitted Sections 206AB and 206CCA from the Income Tax Act, 1961, effective from April 1, 2025. These sections previously mandated higher TDS rates for individuals who had not filed their income tax returns -
Impact on Businesses
• Simplified Compliance: Businesses no longer need to verify whether payees have filed their income tax returns before deducting TDS
• Standard Rates Apply: All transactions will be subject to standard TDS rates regardless of the recipient's tax filing status
• Reduced Administrative Burden: Eliminates the need for maintaining additional records and verification processes
• No Capital Blockage: Prevents excessive tax deduction that was causing cash flow issues for businesses