Tax Deducted at Source (TDS) plays a significant role in tax compliance and directly affects cash flow for individuals and businesses. While earlier Budgets have taken steps to rationalise TDS rates and thresholds, the framework still involves multiple rates under the new Income-tax Act, 2025. With the Union Budget 2026 now announced, this article explains the changes made in TDS and TCS provisions.
Key Changes:
1. No tax shall be deducted at source on interest awarded to an individual or his legal heir under the Motor Vehicles Act.
2. No TDS shall be required on interest income (other than interest on securities) paid or payable to a co-operative bank.
3. A uniform TCS rate of 2% shall apply to alcoholic liquor, scrap, minerals, tendu leaves, specified LRS remittances, and overseas tour packages.
4. Resident individuals and HUFs shall not be required to obtain a TAN for the deduction of tax from consideration paid to a non-resident for the purchase of immovable property.
5. Investors earning dividend or interest income may file a single declaration for non-deduction of tax with the depository, in place of filing declarations with multiple payers.
6. Supply of manpower is expressly included within the definition of “work”, clarifying that TDS shall apply under the contractor provisions of Section 393(1) [Table Sl. No. 6(i)/(ii)], corresponding to Sections 194C or 194M of the Income-tax Act, 1961.
7. Several TDS-related defaults (including non-payment in specified cases such as lottery winnings and perquisites) are proposed to be fully decriminalised. In other TDS/TCS cases, the punishment framework is rationalised on the basis of graded monetary thresholds.
A Glimpse of the People Behind Taxmann
Naveen Wadhwa Research and Advisory [Corporate and Personal Tax]
Chartered Accountant (All India 24th Rank)
14+ years of experience in Income tax and International Tax
Expertise across real estate, technology, publication, education, hospitality, and manufacturing sectors
Contributor to renowned media outlets on tax issues
Vinod K. Singhania
Expert on Panel | Research and Advisory (Direct Tax)
Over 35 years of experience in tax laws
PhD in Corporate Economics and Legislation
Author and resource person in 800+ seminars
V.S. Datey
Expert on Panel | Research and Advisory [Indirect Tax]
Holds 30+ years of experience
Engaged in consulting and training professionals on Indirect Taxation
A regular speaker at various industry forums, associations and industry workshops
Author of various books on Indirect Taxation used by professionals and Department officials
S.S. Gupta
Expert on Panel | Research and Advisory [Indirect Tax]
Chartered Accountant and Cost & Works Accountant
34+ Years of Experience in Indirect Taxation
Bestowed with numerous prestigious scholarships and prizes
Author of the book GST – How to Meet Your Obligations', which is widely referred to by Trade and Industry
Manoj Fogla
Expert on Panel | Research and Advisory [Charitable Trusts and NGOs]
Over three decades of practising experience on tax, legal and regulatory aspects of NPOs and Charitable Institutions
Law practitioner, a fellow member of the Institute of Chartered Accountants of India and also holds a Master's degree in Philosophy
PhD from Utkal University, Doctoral Research on Social Accountability Standards for NPOs
Author of several best-selling books for professionals, including the recent one titled 'Trust and NGO's Ready Reckoner' by Taxmann
Drafted publications for The Institute of Chartered Accountants of India, New Delhi, such as FAQs on GST for NPOs & FAQs on FCRA for NPOs.
Has been a faculty and resource person at various national and international forums
the UAE
Chartered Accountant (All India 36th Rank)
Has previously worked with the KPMG
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