Union Budget 2025: New TDS Rules to Benefit Senior Citizens, Investors, and Commission Earners

The Union Budget 2025, announced by Finance Minister Nirmala Sitharaman, introduces changes to Tax Deducted at Source (TDS) rules, benefiting senior citizens, investors, and commission earners. These updates, effective from April 1, 2025, aim to ease tax compliance and improve cash flow.

1. Higher TDS Exemption for Regular Depositors: The TDS exemption limit on interest income for regular depositors has been increased from ₹40,000 to ₹50,000 per year. Banks will only deduct TDS if interest earnings exceed this amount, reducing the tax burden on those relying on fixed deposit (FD) interest.
2. Simplified TDS Rules for Lottery and Gaming Winnings: The rules for deducting TDS on lottery, crossword, and gaming winnings have been made simpler. Instead of tracking annual total winnings, TDS will now apply only on individual winnings exceeding ₹10,000. For example, if someone wins ₹8,000 multiple times (total ₹24,000), no TDS will be deducted since each win is below ₹10,000.
3. Changes in Investment Income: Investors in mutual funds and stocks will benefit from an increased TDS exemption limit on dividend income, which has been raised from ₹5,000 to ₹10,000. TDS will now apply only when dividends exceed ₹10,000, making it beneficial for small investors.
4. Higher TDS Threshold for Commissions: The minimum earnings before TDS applies on commissions (such as insurance or brokerage commissions) have been increased from ₹15,000 to ₹20,000. This change helps individuals earning smaller commissions by improving cash flow and simplifying tax compliance.
5. Revised TDS Limits for Senior Citizens: To provide financial relief, the TDS exemption limit on interest income from fixed deposits (FDs) and recurring deposits (RDs) for senior citizens has been raised to ₹1 lakh per year. Interest earnings below this limit will not attract TDS.

These revisions aim to simplify tax processes and provide financial relief to various taxpayer groups.