New TDS rules 2025: The Union Budget 2025 has ushered in a series of key adjustments to the Tax Deducted at Source (TDS) framework. These revisions, presented by the Finance Minister, are designed to provide notable financial relief across a spectrum of taxpayers, including senior citizens, investors, commission earners, and property owners, by raising exemption thresholds and simplifying applicable rules. Let’s take a look at the new TDS rules 2025 effective from 1 April.
New TDS rules 2025: Essential changes for income taxpayers
Whether you’re a senior citizen relying on fixed deposit interest, an investor managing dividends, a commission earner, or a property owner, understanding these updated TDS rules is crucial for effective financial planning and tax compliance in the upcoming financial year.
New TDS rules 2025
Senior Citizens: TDS exemption on interest from Fixed Deposits (FDs) and Recurring Deposits (RDs) increased from Rs 50,000 to Rs 1 lakh per financial year.
Regular Depositors: TDS threshold on interest income increased from Rs 40,000 to Rs 50,000 per financial year.
Gaming Winnings: TDS applicable only on individual winnings exceeding Rs 10,000, replacing the previous cumulative annual threshold.
Insurance and Brokerage Commissions: TDS exemption threshold increased from Rs 15,000 to Rs 20,000 per financial year.
Investment Income (Dividends and Mutual Funds): TDS threshold increased from Rs 5,000 to Rs 10,000 per financial year.
Rental Income: TDS threshold increased from Rs 2.4 lakh to Rs 6 lakh per financial year.
Tax Deducted at Source (TDS)
The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
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No tax on income up to Rs 12 lakh for salaried employees in FY 2025-26
The tax scenario for salaried employees in the financial year 2025-26 will be more straightforward. If an individual’s net taxable income is below Rs 12 lakh, no tax will be payable.
For salaried employees with a gross taxable income up to Rs 12.75 lakh, they can avail of the standard deduction of Rs 75,000, allowing them to pay no tax. Additionally, contributions made by the employer to the National Pension System (NPS) can further reduce their net taxable income, enabling them to either pay no tax or a lower amount.
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