TDS Rule: Finance Minister Nirmala Sitharaman has introduced significant modifications to the TDS regulations in the Union Budget 2025, aimed at benefiting taxpayers, particularly senior citizens. Additionally, investors and commission-based earners will also experience financial relief as a result of these changes. Below are the key alterations set to take effect on April 1, 2025, along with the associated advantages.
Government has raised the TDS threshold on interest income
The central government has raised the TDS threshold on interest income for both senior citizens and the general populace. This initiative is designed to enable senior citizens and the middle class to save more effectively. Furthermore, it will alleviate the tax burden on individuals whose income is derived from Fixed Deposit (FD) interest.
TDS will be applicable on interest earned from Deposits
According to the new regulations, TDS will be applicable on interest earned from Fixed Deposits (FD), Recurring Deposits (RD), and similar sources only when the total exceeds Rs 1 lakh. If a senior citizen’s interest income is below Rs 1 lakh, banks will not impose any TDS. Previously, the TDS limit for interest income for the general public was set at Rs 40,000, which has now been increased to Rs 50,000.
Consequently, starting in April 2025, if a common citizen’s interest income is less than Rs 50,000, no TDS will be deducted by the bank. TDS will only be deducted if the interest exceeds Rs 50,000. Additionally, the Budget 2025 has raised the TDS limit on insurance commissions from RS 15,000 to Rs 20,000, providing further relief to insurance agents and brokers. This adjustment will also take effect on April 1, 2025, with the goal of simplifying tax regulations for lower-income earners and enhancing their cash flow.