Finance minister Nirmala Sitharaman made substantial changes to the Tax Deducted at Source (TDS) rules when she presented the Union Budget 2025–2026. These changes will help several taxpayer groups, including commission earners, investors, and senior residents. The new TDS regulations will take effect on april 1, 2025.
TDS rule changes from april 1, 2025
Higher TDS limits for senior citizens
Nirmala Sitharaman suggested raising middle-class and older folks' discretionary income in the Budget 2025. Additionally, the senior citizen threshold limit has been doubled to accomplish this. According to an india Herald report, interest income from FDs, RDs, and other accounts will only be deductible beginning april 1, 2025, when the total amount in a bank for senior persons during a fiscal year exceeds Rs 1 lakh. This implies that the bank will make any TDS deductions if the older folks' interest income stays below Rs 1 lakh.
Increased TDS thresholds for general citizens
Starting in april 2025, the TDS threshold limit for interest income for ordinary persons has been raised from Rs 40,000 to Rs 40,000. The goal of this change to the TDS threshold limit is to lessen the tax burden on depositors, especially those whose only source of income is FD interest. The updated regulations state that if the total yearly interest amount surpasses Rs 50,000, banks would deduct TDS. However, according to the India Herald, if a regular citizen keeps their interest income below Rs 50,000, the bank will not take any TDS.
Simplified TDS rules for gaming winnings
The yearly aggregate threshold restriction of Rs 10,000 has been removed from the TDS regulations pertaining to horse racing, crossword puzzles, and lottery prizes by the government.
Previously, regardless of whether the profits were received in several smaller sums, TDS was withheld when the total earnings in a year exceeded Rs 10,000. According to india Herald, the new rule stipulates that TDS is only applicable in cases when a single jackpot is over Rs 10,000.
For instance: In the past, TDS would have been imposed if a person had won three different lotteries, each at Rs 8,000, for a total of Rs 24,000, since the sum would have exceeded Rs 10,000. Since no one transaction will exceed Rs 10,000 under the new regulation, no TDS will be withheld, india Herald said.
Higher TDS threshold for insurance and brokerage earnings
To help insurance agents and brokers, the Budget 2025 raised the TDS thresholds for several commissions. With effect from april 1, 2025, the TDS threshold for insurance commission has increased from Rs 15,000 to Rs 20,000. The goal of these changes is to increase cash flow for smaller earners in these industries while lowering compliance burdens.
TDS on mutual funds, stocks
For mutual funds and stocks investors, the dividend and income earned from MF units or specific companies, exemption limit has been increased to Rs 10,000 from Rs 5,000.
TDS modification on dividend
From april 1, 2025, investors will enjoy a higher dividend tax deduction threshold limit of Rs 10,000, increased from Rs 5,000. The new limit will allow equities and MF investors to keep more money in their hands, as TDS will only apply when dividend earnings exceed Rs 10,000.
TDS rule changes from april 1, 2025
Higher TDS limits for senior citizens
Nirmala Sitharaman suggested raising middle-class and older folks' discretionary income in the Budget 2025. Additionally, the senior citizen threshold limit has been doubled to accomplish this. According to an india Herald report, interest income from FDs, RDs, and other accounts will only be deductible beginning april 1, 2025, when the total amount in a bank for senior persons during a fiscal year exceeds Rs 1 lakh. This implies that the bank will make any TDS deductions if the older folks' interest income stays below Rs 1 lakh.
Increased TDS thresholds for general citizens
Starting in april 2025, the TDS threshold limit for interest income for ordinary persons has been raised from Rs 40,000 to Rs 40,000. The goal of this change to the TDS threshold limit is to lessen the tax burden on depositors, especially those whose only source of income is FD interest. The updated regulations state that if the total yearly interest amount surpasses Rs 50,000, banks would deduct TDS. However, according to the India Herald, if a regular citizen keeps their interest income below Rs 50,000, the bank will not take any TDS.
Simplified TDS rules for gaming winnings
The yearly aggregate threshold restriction of Rs 10,000 has been removed from the TDS regulations pertaining to horse racing, crossword puzzles, and lottery prizes by the government.
Previously, regardless of whether the profits were received in several smaller sums, TDS was withheld when the total earnings in a year exceeded Rs 10,000. According to india Herald, the new rule stipulates that TDS is only applicable in cases when a single jackpot is over Rs 10,000.
For instance: In the past, TDS would have been imposed if a person had won three different lotteries, each at Rs 8,000, for a total of Rs 24,000, since the sum would have exceeded Rs 10,000. Since no one transaction will exceed Rs 10,000 under the new regulation, no TDS will be withheld, india Herald said.
Higher TDS threshold for insurance and brokerage earnings
To help insurance agents and brokers, the Budget 2025 raised the TDS thresholds for several commissions. With effect from april 1, 2025, the TDS threshold for insurance commission has increased from Rs 15,000 to Rs 20,000. The goal of these changes is to increase cash flow for smaller earners in these industries while lowering compliance burdens.
TDS on mutual funds, stocks
For mutual funds and stocks investors, the dividend and income earned from MF units or specific companies, exemption limit has been increased to Rs 10,000 from Rs 5,000.
TDS modification on dividend
From april 1, 2025, investors will enjoy a higher dividend tax deduction threshold limit of Rs 10,000, increased from Rs 5,000. The new limit will allow equities and MF investors to keep more money in their hands, as TDS will only apply when dividend earnings exceed Rs 10,000.