The new TDS and TCS rules aim to streamline tax processes, reduce errors and mismatches, and ensure faster processing. Key changes include lower TCS rates, simplified property transactions for NRIs, and a unified TDS declaration form to ease paperwork.
With the start of the financial year on April 1, several changes to tax deducted at source (TDS) and tax collected at source (TCS) have come into effect. The reforms are aimed at saving time, reducing manual errors, and improving compliance.
The changes cover a wide range of financial transactions, including foreign remittances, property deals, and investment income. Here are the key updates taxpayers—especially NRIs, investors, international students and travellers—should note:
Foreign travel packages will now attract a flat 2 percent TCS, replacing the earlier 5 percent (up to ₹10 lakh) and 20 percent beyond that threshold.
Education and medical remittances abroad will now be taxed at 2 percent TCS, down from 5 percent on amounts above ₹10 lakh.
These changes are expected to ease the upfront tax burden on individuals while maintaining reporting visibility for tax authorities. The overhaul was announced in the Union Budget 2026 and is effective from the start of the financial year.
In a major relief for resident buyers purchasing property from non-resident Indians (NRIs), a key procedural requirement has been removed.
From October 1, 2026, buyers will no longer need to obtain a tax deduction account number (TAN). Instead, the buyer’s Permanent Account Number (PAN) will be sufficient to meet TDS requirements.
This move is expected to reduce compliance hurdles and make NRI property transactions smoother.
Retail investors will see a significant reduction in paperwork with the introduction of a unified TDS non-deduction declaration form.
Form 15G and Form 15H have been replaced by a single Form 121.
The new form serves the same purpose—allowing taxpayers to declare nil tax liability and avoid TDS deductions.
Earlier, Form 15G was used by individuals below 60 years, while Form 15H applied to senior citizens. With the introduction of Form 121, this age-based distinction has been removed.
Based on the declaration, the payer will not deduct tax on income if the taxpayer’s liability is nil.
Under the old tax regime, the basic exemption limit is ₹2.5 lakh for individuals below 60 years and ₹3 lakh for senior citizens.
Under the new tax regime, the exemption limit is ₹4 lakh for all individuals.
Overall, the new TDS and TCS framework aims to simplify compliance, reduce paperwork, and improve the efficiency of tax administration for a wide range of taxpayers.