Finance Minister Nirmala Sitharaman has introduced major revisions to the Tax Deducted at Source (TDS) rules in the Union Budget 2025, aiming to provide financial relief to taxpayers. These new changes specifically focus on benefiting senior citizens, investors, and commission earners. Here’s a complete breakdown of the key updates, effective from April 1, 2025.

How Senior Citizens Will Benefit From Higher Exemption Limit

Senior citizens will benefit from a higher exemption limit on interest income from fixed deposits (FDs) and recurring deposits (RDs). The government has doubled the TDS threshold from ₹50,000 to ₹1 lakh per financial year. Now, banks will deduct TDS only if total interest earnings exceed ₹1 lakh. This means senior citizens who keep their interest income below ₹1 lakh won’t have any TDS deducted by the bank.

How Will It Be For Other Citizens

The government raised the TDS threshold for general citizens on interest income from ₹40,000 to ₹50,000, effective April 2025. This move reduces the tax burden on depositors, especially those who depend on FD interest as their primary income source.

Under the revised rules, banks deduct TDS only if interest earnings exceed ₹50,000. However, no TDS applies if a general citizen keeps their interest income within ₹50,000.

The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, has introduced major revisions to the tax deducted at source (TDS) rules, aimed at providing financial relief to taxpayers, especially senior citizens, investors, and commission earners. Here’s a breakdown of the key changes effective from April 1, 2025.

TDS On Lottery Winnings And Horse Race Bets

Now, while talking about TDS on lottery winnings, horse bets and crossword puzzles, TDS will be deducted per transaction instead of on an annual aggregate basis. However, Previously, TDS was applied once total winnings exceeded ₹10,000 in a financial year, even if it was received in smaller amounts over time. Now, TDS will only be deducted if a single transaction exceeds ₹10,000, making the process simpler and fairer for winners who receive smaller payouts.

Previously, if someone won three separate lottery prizes of ₹9,000 each, totaling ₹27,000, TDS was deducted because the combined winnings exceeded the ₹10,000 threshold in a financial year.

Insurance And Brokerages commissions

The new rule will be beneficial for the insurance agents and brokers. Previously, TDS was deducted on insurance commissions exceeding ₹15,000 in a financial year. Now, this limit has been raised to ₹20,000, effective April 1, 2025.