Mumbai's Financial Sector Welcomes TDS Reduction

In a significant move to invigorate the asset reconstruction sector, the government has announced a reduction in the Tax Deducted at Source (TDS) on security receipts from 30% to 10%. This strategic decision is poised to make investments in bad debt more appealing to investors, thereby enhancing the liquidity and operational efficiency of Asset Reconstruction Companies (ARCs).

Harihara Mishra, CEO of the Association of ARCs of India, expressed his approval of the change, highlighting the positive impact it would have on the industry. "The previous TDS rate was a significant barrier, locking up substantial funds and diminishing the attractiveness of security receipts. The reduction to 10% is a game-changer," Mishra stated.

Budget 2025: A New Era for Taxpayers and Investors

Alongside the TDS reduction, the Budget 2025 introduces several pivotal changes aimed at benefiting both taxpayers and investors. Notably, the new income tax regime offers no tax up to an income of Rs 12 lakh, alongside revised tax slabs for the fiscal year 2025-26. These measures are expected to provide a much-needed boost to the middle class and stimulate investment in key sectors.

The amendment to Section 194LBC of the Income Tax Act, effective from April 1, 2025, signifies the government's commitment to streamlining tax processes and fostering a conducive environment for financial growth and stability.