The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced a few changes to Tax Deducted at Source (TDS) regulations. These changes aim to provide financial relief to different taxpayer groups, including senior citizens, investors and commission earners. The updated TDS rules are set to come into effect from Apr. 1, 2025.
Here’s what you need to know.
Higher TDS Exemption For Senior Citizens
Senior citizens will see an increase in their TDS exemption limit on interest earned from fixed deposits (FDs) and recurring deposits (RDs). The threshold has been raised from Rs 50,000 to Rs 1 lakh in each financial year. This means that banks will only deduct TDS if the total interest earnings exceed Rs 1 lakh. Those earning interest below this limit will be exempt from TDS deductions.
Revised TDS Limits For Regular Depositors
For non-senior citizens, the government has also increased the TDS threshold on interest income from Rs 40,000 to Rs 50,000 per financial year. This change will benefit those people relying on interest earnings from bank deposits. Under the new system, TDS will only be applicable when annual interest earnings surpass Rs 50,000, helping depositors retain more of their income.
Simplified TDS Rules For Gaming Winnings
The government has restructured TDS regulations on lottery winnings, crossword puzzles and horse racing. Earlier, a cumulative yearly threshold of Rs 10,000 was applied, meaning tax was deducted when total winnings crossed this limit. From Apr. 1, 2025, TDS will only be applicable on individual winnings exceeding Rs 10,000. For example, if a person wins Rs 8,000 three times — which makes it a total of Rs 24,000 — no TDS will be deducted since each winning is below Rs 10,000. This change simplifies tax deductions for gaming earnings.
Increased Exemption For Insurance, Brokerage Commissions
Insurance agents and brokers will benefit from a higher exemption limit on commission earnings. The TDS threshold has been increased from Rs 15,000 to Rs 20,000 per financial year. This revision aims to improve cash flow for agents and reduce their compliance burden.
Changes In TDS On Investment Income
Investors will see an increase in the TDS exemption threshold for dividend and mutual fund (MF) income. Starting April 2025, TDS will only be deducted if the total dividend or MF earnings exceed Rs 10,000 per financial year, up from the previous Rs 5,000 threshold.
Revised TDS Limits For Rental Income
The TDS threshold for rental income has been significantly increased. Earlier, landlords were required to pay TDS if annual rental earnings exceeded Rs 2.4 lakh. Under the new rule, the exemption limit has been raised to Rs 6 lakh, providing significant relief to property owners.
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