The Union Budget 2025 proposes a rationalization of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) rates to simplify tax compliance and reduce the burden on taxpayers.

The TCS rate under Sub-section (1) of Section 206C on timber and other forest produce (excluding tendu leaves) has been lowered from 2.5% to 2%, irrespective of whether the timber is obtained under a forest lease or through other means.

Under sub-section (1G) of section 206C , the government has eliminated the TCS on remittances under the Liberalized Remittance Scheme (LRS) for educational purposes when financed by a loan from a financial institution. Previously set at 0.5% for amounts exceeding ₹7 lakh, the rate has now
been reduced to nil. These changes aim to streamline tax rates, enhance ease of compliance, and provide relief to taxpayers.
Under sub-section (1G) of section 206C(1G), the threshold limit has been revised to provide relief to taxpayers. For remittances made under the Liberalized Remittance Scheme (LRS) and payments towards overseas tour packages, the threshold for TCS applicability has been increased from
₹7,00,000 to ₹10,00,000.