Finance Minister Nirmala Sitharaman began her eighth consecutive budget presentation on February 1, 2025, emphasizing the government’s sustained efforts to accelerate growth, secure inclusive development, and boost household sentiment. The budget speech, presented in Parliament at 11 a.m., aims to uplift India’s economic prospects while remaining fiscally disciplined.
This year’s budget comes at a time when India’s economy is projected to grow between 6.3% and 6.8% in 2025-26, according to the Economic Survey for 2024-25. The survey, tabled in Parliament on January 31, reflects optimism regarding India’s post-pandemic recovery but emphasizes the need for sustained reforms to achieve long-term economic stability.
As part of its ongoing efforts to simplify the tax regime, Sitharaman announced a rationalisation of the Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) regime. The changes aim to streamline compliance and reduce the complexity of tax deductions for taxpayers.
Key Announcements on TDS and TCS:
- Reduction in TDS rates and thresholds: The number of rates and thresholds for TDS deductions will be reduced, making it easier for taxpayers to comply with tax requirements.
- Increased threshold for TCS on LRS remittance: The threshold for Tax Collected at Source (TCS) on remittances under the Liberalised Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh.
- TCS exemption on education loans: The government proposes to remove TCS on education loans up to ₹10 lakh, provided they are obtained from specified financial institutions.
Updated Tax Returns:
- Extended time limit for filing updated tax returns: The time limit to file updated tax returns has been extended from 2 years to 4 years, giving taxpayers more flexibility and time to correct past returns and improve compliance.
