Starting from April 1, 2025, several key changes to TDS (Tax Deducted at Source) rules will be implemented as part of the new financial year (FY 2024-25).
Union Finance Minister Nirmala Sitharaman announced these changes in Budget 2024, which will benefit senior citizens, investors, commission earners, and others.
The revised rules aim to reduce tax liabilities and increase disposable income.
1. Major Relief for Senior Citizens
To ease the tax burden on senior citizens, the government has exempted TDS on interest income up to Rs 1 lakh.
This means that from April 1, 2025, senior citizens will not have TDS deducted on interest earned from Fixed Deposits (FDs), Recurring Deposits (RDs), and other interest-earning options, as long as the total interest income does not exceed Rs 1 lakh.
If the income surpasses Rs 1 lakh, TDS will be deducted only on the excess amount. This change is especially helpful for senior citizens who rely on interest income.
2. TDS Limit Increased for General Public
For regular taxpayers, the government has raised the TDS threshold on interest income from Rs 40,000 to Rs 50,000.
This means that banks will only deduct TDS on interest income exceeding Rs 50,000. This change will benefit small investors and the middle class, allowing them to earn more interest without having TDS deducted.
3. New TDS Rules for Online Gaming
The government has also revised TDS rules for online gaming. Under the new rules, TDS will only be deducted when total winnings exceed Rs 10,000.
Previously, TDS was applied to each individual win, but now, even if a person wins Rs 8,000 multiple times, TDS won’t be deducted until the total winnings exceed Rs 10,000.
This change offers relief to smaller players and simplifies tax compliance.
4. Relief for Commission Earners
Commission agents, particularly insurance agents, will benefit from an increased TDS limit.
The TDS deduction limit for insurance agents has been raised from Rs 15,000 to Rs 20,000. This increase reduces the tax burden on smaller insurance agents.
5. Benefits for Mutual Fund and Stock Market Investors
For mutual fund and equity investors, the government has raised the dividend tax exemption limit from Rs 5,000 to Rs 10,000.
This means that no TDS will be deducted on dividends up to Rs 10,000, allowing investors to keep more of their earnings.
Relief for Taxpayers
These changes are part of the government’s efforts to make TDS rules easier and more transparent. By reducing tax liabilities, these reforms aim to encourage investment.
The new rules will be effective from April 1, 2025, providing significant relief to senior citizens, small investors, insurance agents, and online gaming participants.
