TDS New Rules: Important TDS rules change from April 1

TDS New Rules: The Indian Income Tax Act mandates tax deduction at source (TDS) on various payments made to individuals and organizations. The payer deducts TDS at source before making the payment to the payee. TDS New Rules: Important TDS rules change from April 1.

However, there are concerns about the complexity and multiple rates of TDS under various sections, especially when it comes to thresholds and different rates applicable to individuals and other entities. To improve ease of doing business and compliance for taxpayers, the government has proposed to rationalize TDS provisions with effect from April 1, 2025.

This includes both a reduction in some rates and an increase in applicable limits. In the Union Budget-2025, the government announced several changes related to taxation. In this issue, some changes have been made in the tax deduction at source (TDS) rules.

This change will come into effect from April 1, 2025. After this change, people making fixed deposits (FD) are expected to get relief. Let us tell you that TDS stands for Tax Deducted at Source. When the interest on an FD in a bank exceeds a certain limit, the bank has to deduct TDS. This limit is different for senior citizens and non-senior citizens.

In the budget, it is proposed to rationalize these limits so that you do not have to face unnecessary TDS deductions again and again.

New TDS limit for senior citizens:

To benefit senior citizens, the government has doubled the TDS limit on interest income. From April 1, banks will deduct TDS only if the total interest income in a financial year exceeds Rs 1 lakh. This means that if the total interest income of the senior citizen remains within this limit, no TDS will be deducted.

This rule applies to interest earned from fixed deposits (FDs), recurring deposits (RDs) and other savings instruments.

New TDS limit for common citizens:

The TDS limit on interest income for ordinary citizens has been increased from Rs 40,000 to Rs 50,000. If the total interest income is within Rs. 50,000, no TDS will be deducted. This change is made with the aim of reducing the tax burden on those who depend on income from FD interest.

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