Enhanced TCS Threshold Limits Effective April 1, 2025
As part of Budget 2025, the government has revised the Tax Collected at Source (TCS) provisions to streamline compliance for individuals and businesses. Key updates include increased threshold limits and the removal of TCS on select transactions.
The table below summarizes the major changes effective from April 1, 2025:
| Section | Before April 1, 2025 | From April 1, 2025 |
|---|---|---|
| 206C(1G) – Remittance under LRS & Overseas Tour Packages | ₹7,00,000 | ₹10,00,000 |
| 206C(1G) – LRS for Education (financed by loans) | ₹7,00,000 | Nil (No TCS Applicable) |
| 206C(1H) – Purchase of Goods | ₹50,00,000 | Nil (No TCS Applicable) |
TCS on Remittances under LRS – Section 206C(1G)
Under the Liberalised Remittance Scheme (LRS), individuals can remit money abroad for purposes such as education, healthcare, or personal travel. Budget 2025 has revised the threshold for TCS:
Before April 1, 2025: TCS applied on remittances exceeding ₹7 lakh.
From April 1, 2025: The threshold is increased to ₹10 lakh.
TCS rates remain unchanged
Remittances for Education (Section 206C(1G))
TCS will no longer apply to educational remittances made under the Liberalised Remittance Scheme (LRS) if the funds are sourced through an education loan.
Before April 1, 2025: TCS was applicable on educational remittances exceeding ₹7 lakh under LRS.
From April 1, 2025: No TCS on educational remittances financed via loans. The specific provision under Section 206C(1G) has been removed.
Removal of TCS on Sale of Goods (Section 206C(1H))
Section 206C(1H), which mandated TCS on high-value sales of goods, has been eliminated.
Before April 1, 2025: TCS was collected on the sale of goods exceeding ₹50 lakh annually.
From April 1, 2025: No TCS applicable. This move resolves the dual applicability conflict with TDS under Section 194Q and reduces compliance complexity
Removal of Higher TCS Rates for Non-Filers (Section 206CCA)
To reduce compliance overhead and operational friction, Section 206CCA—which imposed higher TCS rates on non-filers—has been abolished.
From April 1, 2025: Businesses no longer need to verify ITR filing status before applying TCS rates. This streamlines tax collection and avoids capital blockages.
Note: Section 206AB, related to higher TDS for non-filers, is also being withdrawn
Relief from Prosecution for Delayed TCS Payment (Section 276BB)
To reduce legal penalties for administrative delays:
Amendment to Section 276BB: Prosecution will not be initiated if the TCS amount is deposited by the due date for filing the quarterly TCS statement under Section 206C(3).
This change offers businesses relief from harsh penalties in case of minor delays.
Reduced TCS Rates for Forest Produce (Section 206C(1))
The TCS rate on forest produce (excluding tendu leaves) has been reduced:
Before April 1, 2025: 2.5%
From April 1, 2025: 2%
The definition of “forest produce” will now align with that under the Indian Forest Act, 1927, or relevant State laws
Key Takeaways
LRS threshold raised from ₹7 lakh to ₹10 lakh.
No TCS on education remittances if funded through loans.
TCS on sale of goods above ₹50 lakh has been removed.
Section 206CCA eliminated—no higher TCS for non-filers.
Prosecution relief for timely payment of delayed TCS.
TCS on forest produce reduced from 2.5% to 2%.
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About the Author
Muskan
Muskan is a skilled legal writer who specializes in breaking down complex legal concepts into clear, practical guidance. Her content is designed to equip entrepreneurs with the insights they need to confidently navigate business laws and build successful ventures from the ground up.
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