Tax Deducted at Source (TDS): The presentation of the Union Budget 2025 introduced several significant modifications concerning income tax. Additionally, adjustments were made to the regulations governing Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), set to take effect on April 1.
The proposed Income Tax Bill aims to raise the tax thresholds for various provisions. These reforms are intended to simplify tax compliance for both taxpayers and business owners, alleviating unnecessary challenges. The new legislation also offers certain concessions to senior citizens, investors, and commission-based earners.
Rules for senior citizens
To support senior citizens, the government has increased the TDS threshold for interest income, doubling it. Starting April 1, banks will only deduct TDS if the total interest income for a financial year surpasses Rs 1 lakh. Consequently, if a senior citizen’s total interest income remains below this threshold, no TDS will be applied. This regulation pertains to interest accrued from fixed deposits (FD), recurring deposits (RD), and other savings instruments.
Rules for common people
For the general populace, the TDS limit on interest income has been raised from Rs 40,000 to Rs 50,000. Thus, if the total interest income is under Rs 50,000, no tax will be withheld. This adjustment aims to lessen the tax burden on depositors who rely on FD interest as a source of income.
Previously, TDS was deducted when total lottery winnings in a year exceeded Rs 10,000, regardless of whether the winnings were received in smaller amounts. Under the new rules, TDS will only be deducted if a single transaction exceeds Rs 10,000. Furthermore, insurance agents and brokers will benefit from an increased TDS limit, as the threshold for insurance commission has been raised from Rs 15,000 to Rs 20,000, effective from April 1.