TDS Savings: More savings on interest income from April 1; Benefit from the new rule of tax deduction at source

New Delhi| New rules for Tax Deducted at Source (TDS) are going to come into effect in the country from April 1, 2025. This was announced in the 2025-26 budget. After the implementation of this rule from the new financial year, those taxpayers who earn from interest on deposits will save more.

Senior and ordinary citizens, retail investors and commission earners will benefit from these changes. Important changes have been made in the rules related to TDS deduction on earnings from fixed deposits, lotteries, insurance commissions and mutual funds.

Under the new rules, the limit of TDS on fixed deposits and recurring deposits for senior citizens has been increased. Banks till now used to deduct TDS on interest above Rs 50,000, but, from April 1, 2025, this limit will increase to Rs 1 lakh. After this, if the interest income of a senior citizen during a financial year is up to Rs 1 lakh, then banks will not deduct any TDS on it.

Common citizens have also been given relief on the TDS front. Banks till now used to deduct TDS on interest income of more than Rs 40,000 annually, the limit of which has been increased to Rs 50,000. That is, no TDS will be deducted from the bank now on interest income less than Rs 50,000.

The new rule will also be beneficial for those investing in mutual funds and stock market. Till now, TDS has been deducted on dividend income of more than Rs 5,000 through shares and mutual fund units. But, from April 1, 2025, this limit has been increased to Rs 10,000. This means that from the new financial year, if the investor receives a dividend of up to Rs 10,000 from mutual funds or companies, no TDS will be deducted on it.

The change in TDS rules is also going to provide relief to insurance agents and brokers. Earlier, TDS was deducted on insurance commission of more than Rs 15,000. Now this limit has been increased to Rs 20,000. Apart from this, TDS rules related to earnings from lottery or horse racing have also been simplified. Now TDS will be deducted only if the winnings in any one transaction exceed Rs 10,000. Earlier, TDS was deducted on total income of more than Rs 10,000 in the year.