The government has simplified the TDS rules related to winnings from lottery, crossword and horse racing. The TDS limit for insurance commission has been increased from Rs 15,000 to Rs 20,000.
In the budget presented on February 1, Finance Minister Nirmala Sitharaman announced major changes in the tax deduction at source (TDS) rules. The new TDS rule will come into effect from April 1. After the new rules come into force, investors doing fixed deposits (FD) and recurring deposits (RD) will get a big relief. In fact, giving relief to senior citizens, the limit of TDS deduction on income from FD has been doubled. Relief has also been given to common citizens. From April 1, TDS deduction on interest income from fixed deposits (FD), recurring deposits (RD), etc. for senior citizens will be done only when the interest income exceeds Rs 1 lakh in a financial year. This means that if a senior citizen’s interest income is less than Rs 1 lakh, he will not have to pay TDS.
Relief for common people too
For non-senior citizens (common citizens), the government has increased the TDS limit for interest income from Rs 40,000 to Rs 50,000 with effect from April 2025. The move is aimed at reducing the tax burden on depositors, especially those who depend on FD interest as a primary source of income. As per the revised rules, the bank will deduct TDS if the total annual interest amount exceeds Rs 50,000. However, if a common citizen keeps his interest income within the limit of Rs 50,000, the bank will not deduct any TDS.
TDS on lottery
The government has simplified the TDS rules related to winnings from lotteries, crosswords and horse racing. Earlier, TDS was deducted if the total winnings in a year exceeded Rs 10,000. Now TDS will be deducted only if a transaction exceeds Rs 10,000. Budget 2025 also increased the TDS limit for various commissions, providing relief to insurance agents and brokers. The TDS limit for insurance commission has been raised from Rs 15,000 to Rs 20,000, effective from April 1, 2025. For those investing in mutual funds (MFs) or stocks, the exemption limit on dividends and income earned from MF units or specific companies has been raised from Rs 5,000 to Rs 10,000.
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