Changes in TDS Rules Starting April 1: Know the Details here

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, brought important changes to the Tax Deducted at Source (TDS) rules.

These changes aim to benefit different taxpayers, including senior citizens, investors, and those earning commissions. The new rules of TDS will come into effect on 1st April 2025.

Here are the key changes every taxpayer needs to know.

Higher TDS Exemption for Senior Citizens

Senior citizens will gain from a higher TDS exemption limit on interest received on fixed deposits (FDs) and recurring deposits (RDs). The exemption threshold has been increased to Rs.1 lakh per financial year from Rs.50,000. Banks will only deduct TDS if total interest earnings exceed Rs.1 lakh, ensuring that senior citizens with smaller interest earnings are exempt from deductions.

Updation in the TDS Limits for Regular Depositors

The central government has hiked the TDS limit on interest income to Rs.50,000 per annum from Rs.40,000 for non-senior citizens. What this implies is that TDS will be required only when interest income for a year is over Rs.50,000 so that depositors are able to keep more of their own hard-earned money without deduction.

TDS Rules Simplified for Winnings from Online Gaming and Commission Earnings

The Union Budget 2025 brought major amendments in TDS regulation that simplify tax deductions on gaming winnings and commission earnings, effective from April 1, 2025.

The government has restructured the TDS rules for lottery, crossword puzzle, and horse racing winnings. Pror, a cumulative yearly threshold of Rs.10,000 was applied. Now, TDS will only be applicable on individual winnings exceeding Rs.10,000.

For instance, if an individual wins Rs.8,000 three times, amounting to Rs.24,000, no TDS will be deducted, as each win is less than the Rs. 10,000 threshold. This amendment makes the process easier for taxpayers.

Exemption for Insurance and Brokerage Commissions Increased

Insurance agents and brokers will benefit from a higher TDS exemption limit on commission earnings. The threshold has been increased from Rs.15,000 to Rs.20,000 per financial year. This update helps in enhancing the cash flow for agents and decreasing their compliance burden.

TDS on Dividend and Mutual Fund Income

Starting in April 2025, the TDS exemption threshold for dividend and mutual fund (MF) income will increase. TDS will now only be deducted if the overall income is over Rs.10,000 per financial year, from an earlier limit of Rs.5,000. The move is intended to favour small investors by curtailing tax deductions on lower incomes.

Revised TDS Limits for Rental Income

The TDS threshold for rental income has been significantly raised. Previously, landlords had to pay TDS if their annual rental income exceeded Rs.2.4 lakh. Under the new rules, the exemption limit has been raised to Rs.6 lakh, offering significant relief to property owners.