Budget 2025 highlights: Higher tax exemptions, revised TDS and TCS limits announced

New Delhi: Finance Minister Nirmala Sitharaman has announced significant tax reforms in Budget 2025, including a complete income tax exemption for individuals earning up to Rs 12 lakh annually.

The government has also raised the Tax Deducted at Source (TDS) limit to Rs 10 lakh and introduced a major relief for senior citizens, allowing them to file tax returns for up to four years.

A key highlight of the budget is the revision in the Tax Collected at Source (TCS) regime under the Reserve Bank of India’s (RBI) Liberalized Remittance Scheme (LRS).

The Finance Minister proposed increasing the TCS threshold from Rs 7 lakh to Rs 10 lakh and removing TCS on remittances made for educational purposes.

Speaking to Financial Express, Bhavik Thakkar, CEO of Abans Investment Managers, welcomed the move, stating that the higher TCS limit would facilitate greater investment in global funds.

TCS is applied when Indian citizens send money abroad, with tax deducted at the transaction stage by banks or remittance services. This system, implemented in October 2020, was introduced to regulate foreign remittances under the LRS.

The government has now assured that taxpayers paying TCS can claim credit for the deducted amount while filing their income tax returns, potentially lowering their overall tax liabilities.