New TDS Rules from April 1, 2025: Key Changes for FD Interest, Mutual Funds, and Lottery Winnings
New TDS Rules from April 1, 2025: Key Changes for FD Interest, Mutual Funds, and Lottery Winnings
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced several revisions to the Tax Deducted at Source (TDS) rules, impacting senior citizens, investors, and commission earners. These changes, aimed at easing compliance and enhancing cash flow, will take effect from April 1, 2025.
Higher TDS Threshold for Insurance and Brokerage Commissions
To benefit insurance agents, the TDS threshold on commission earnings has been increased from ₹15,000 to ₹20,000. This adjustment simplifies tax compliance and improves cash flow for individuals earning lower commissions.
Revised TDS Limits for Senior Citizens
To provide financial relief to senior citizens, the TDS exemption limit on interest income from fixed deposits (FDs) and recurring deposits (RDs) has been raised to ₹1 lakh per year. Interest earnings below this threshold will not attract TDS.
Simplified TDS Rules for Lottery and Gaming Winnings
Previously, TDS was deducted when cumulative annual winnings from lotteries, crossword puzzles, and horse racing exceeded ₹10,000. The new rule removes the annual aggregate limit and applies TDS only on individual winnings exceeding ₹10,000. For instance, if a person wins ₹8,000 three times (total ₹24,000), no TDS will be deducted since each win is below ₹10,000.
Higher TDS Exemption for Regular Citizens
The TDS threshold on interest income for regular depositors has been raised from ₹40,000 to ₹50,000. Banks will only deduct TDS if annual interest earnings exceed this limit, reducing the tax burden on individuals relying on FD interest.
Changes in Investment Income
For mutual fund and stock investors, the TDS exemption limit on dividend income has been increased from ₹5,000 to ₹10,000. TDS will now only apply when dividend earnings exceed this amount, benefiting small investors.
These revisions aim to simplify tax processes and provide financial relief to various taxpayer groups.
