TDS
In the budget presented on 1 February, a major change in the tax deduction (TDS) rules was announced by Finance Minister Nirmala Sitharaman. The new TDS rule will be applicable from 1 April. After the new rules are implemented, investors making fixed deposits (FD) and recurring deposits (RD) will get great relief. In fact, giving relief to senior citizens, the limit of TDS deduction on income from FD has been doubled. Common citizens have also been given relief. From April 1, TDS will be deducted on interest income from fixed deposits (FD), recurring deposits (RD), etc. for senior citizens only when interest income will be more than Rs 1 lakh in a financial year. This means that if the interest income of a senior citizen is less than Rs 1 lakh, then he will not have to pay TDS.
Relief for common people
For non-preventive citizens (common citizens), the government has increased the TDS limit from Rs 40,000 to Rs 50,000 for effective interest income from April 2025. The move aims to reduce the tax burden on the depositors, especially those who depend on FD interest as the primary source of income. As per the revised rules, if the total annual interest amount is more than Rs 50,000, the bank will deduct TDS. However, if an ordinary citizen keeps his interest income within a limit of Rs 50,000, the bank will not deduct any TDS.
TDS on lottery
The government has simplified the TDS rules related to the victory with lottery, crosswords and horse raping. Earlier, TDS was deducted when the total win was more than Rs 10,000 in a year. Now TDS will be deducted only when a transaction is more than Rs 10,000. The TDS limit for various commissions has also been increased in Budget 2025, providing relief to insurance agents and brokers. The TDS limit for insurance commission has been increased from Rs 15,000 to Rs 20,000, which will be effective from 1 April 2025. Mutual funds (MFs) or invested in shares have been increased from Rs 5,000 to Rs 10,000 for those investing in dividends and income earned from MF Unit or specific companies.
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