New TDS Rules: Changes in tax deduction limits for FD interest, dividend & rental income from April 2025; here's how you can benefitf
New TDS Rule for Senior Citizens: Interest earnings from FD, RD, and similar investment plans will be exempted from bank TDS deductions if the cumulative amount is below Rs 1 lakh. This rule applies from April 1, 2025. However, senior citizens will face deductions if this interest amount exceeds Rs 1 lakh.
Finance Minister Nirmala Sitharaman in her budget speech 2025 on February 1 announced several reforms and updates to the existing tax system. Among such changes are new TDS rules for FD interest, dividend and rental income for investors and senior citizens. These significant changes are set to take place from April 1, 2025. Take a look:
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New TDS limits for senior citizens
Interest earnings from FD, RD, and similar investment plans will be exempted from bank TDS deductions if the cumulative amount is below Rs 1 lakh. This rule applies from April 1, 2025. However, senior citizens will face deductions if this interest amount exceeds Rs 1 lakh.
What is the present TDS deduction limit for senior citizens?
The current limit for a tax deduction on interest for senior citizens is Rs 50,000. This limit has now been doubled to Rs 1,00,000.
TDS limits for other citizens
For other investors, this limit has been increased from Rs 40,000 to Rs 50,000. Bank will deduct TDS if the limit crosses Rs 50,000.
TDS for gaming winnings
There is a change in TDS for gaming winnings also. The tax will be deducted only when an individual’s winnings exceed Rs 10,000. This means that even if a person wins Rs 8,000 multiple times, no TDS will be deducted unless their total winnings exceed Rs 10,000.
Insurance and brokerage commission
Higher TDS thresholds have also been announced for commission earnings. The TDS threshold of Rs 20,000 has been introduced from the current Rs 15,000. This will benefit insurance agents.
Tax on dividend
Finance Minister had also introduced a higher dividend tax deduction threshold of Rs 10,000. This limit has been increased from the current Rs 5,000 limit that will benefit equity investors.
FDI in insurance sector
The FDI limit for the insurance sector has been raised from 74 to 100 per cent. This enhanced limit will be available for those companies which invest the entire premium in India.
TDS on rental income
The annual limit of 2.40 lakh for TDS on rent has been increased to Rs 6 lakh.
TCS
The threshold to collect tax at source (TCS) on remittances under RBI’ Liberalized Remittance Scheme (LRS) is proposed to be increased from Rs 7 lakh to Rs 10 lakh.
Benefits
These changes will help ease the tax burden on taxpayers and will simplify the tax process. The taxpayers will benefit from these from April 1, 2025.