The tax deducted at source (TDS) statements made in the Budget 2025 will go into effect on April 1, 2025. The modifications are intended to give taxpayers—primarily investors, older people, and commission earners—financial relief.
Increased TDS Exemption for Mutual Funds & Stocks
A greater exemption level on dividend income and mutual fund (MF) profits will be advantageous to investors. With effect from April 1, the government quadrupled the TDS exemption limit on stock dividends and income from mutual funds (MF) units from Rs 5,000 to Rs 10,000, as part of the Union Budget 2025–26 that Finance Minister Nirmala Sitharaman delivered.
Higher Dividend Income TDS Threshold
By raising the exemption from Rs 5,000 to Rs 10,000, the budget has increased the TDS limit on dividend income, enabling investors to keep a larger portion of their profits.
Higher Senior Citizen TDS Exemption
The government upped the TDS exemption level for older folks to provide them more financial comfort. Beginning April 1, 2025, banks will only deduct TDS on interest income from recurring deposits (RDs) and fixed deposits (FDs) if the total interest earnings for a given fiscal year surpass Rs 1 lakh. This implies that no TDS will be withheld if a senior citizen’s yearly interest income stays below this cap.
Simplified TDS on Lottery Winnings & Horse Racing Bets
The government has updated the TDS regulations about winnings from horse racing wagers, crossword puzzles, and lotteries. In the past, even if prizes were paid in several smaller sums, TDS was withheld if total winnings in a fiscal year exceeded Rs 10,000. TDS would only be imposed under the new rule if a single transaction totals more than Rs 10,000.
TDS Threshold Raised for General Citizens
The TDS threshold on interest income for those under 60 has been raised from Rs 40,000 to Rs 50,000. For depositors who rely on FD interest as a major source of income, this action is very advantageous. TDS will now only be deducted by banks if the total interest generated during a fiscal year is above Rs 50,000.
Relief for Insurance Agents and Brokers
The Budget 2025 has raised the TDS exemption level for commissions to facilitate compliance and improve cash flow for professionals working in the insurance and broking industries. With effect from April 1, 2025, the insurance commission threshold has been increased from Rs 15,000 to Rs 20,000.
