TDS Rules Changing from April 2025: Key Tax Deduction Changes for FDs, Mutual Funds & More

Starting April 1, 2025, major changes in Tax Deducted at Source (TDS) will come into effect, impacting senior citizens, investors, and commission earners. Announced in the Union Budget 2024 by Finance Minister Nirmala Sitharaman, these updates aim to reduce the tax burden and boost disposable income. Here’s a breakdown of what’s changing.

Higher TDS Exemption for Senior Citizens
Senior citizens will now enjoy TDS exemption on interest income up to ₹1 lakh from Fixed Deposits (FDs), Recurring Deposits (RDs), and similar savings instruments. TDS will only apply if interest earnings surpass this limit, offering much-needed relief to retirees relying on interest income.

Increased TDS Threshold for General Public
For individuals below 60, the TDS threshold on interest income has been raised from ₹40,000 to ₹50,000. This means banks will only deduct TDS if total interest earnings exceed ₹50,000 annually, providing tax relief to moderate-income depositors.

Simplified TDS for Gaming Winnings
TDS on gaming winnings will now be deducted only if earnings exceed ₹10,000 per instance. Earlier, winnings were aggregated, leading to higher deductions. Now, even if someone wins multiple times, TDS will only apply once they cross the ₹10,000 mark.

Higher TDS Limits for Commission Earners
Insurance agents: TDS exemption threshold increased from ₹15,000 to ₹20,000.
Mutual fund & equity investors: The tax-free dividend income limit has doubled from ₹5,000 to ₹10,000.

These revised TDS rules simplify taxation and ease compliance, offering relief to taxpayers while making the system more transparent. With higher exemptions and streamlined rules, individuals can expect a more tax-friendly approach from April 2025.