Higher TDS Exemption Limits from April: Who Benefits & How?

Starting April 1, 2025, significant changes to India's Tax Deducted at Source (TDS) provisions will come into effect, aiming to simplify tax compliance and provide relief to various taxpayer segments. These adjustments, introduced in the Union Budget 2025, focus on increasing exemption thresholds across multiple income categories.

News TDS Exemption Limits

Interest Income: For senior citizens, the TDS exemption limit on interest earned from fixed deposits and recurring deposits has been raised from Rs 50,000 to Rs 1 lakh annually. For other individuals, this threshold increases from Rs 40,000 to Rs 50,000.

Rental Income: The TDS exemption threshold for rental income has been elevated from Rs 2.4 lakh to Rs 6 lakh per annum, benefiting landlords with moderate rental earnings.

Dividend and Mutual Fund Income: Investors will experience relief as the TDS exemption limit on dividends and income from mutual funds has doubled from Rs 5,000 to Rs 10,000, encouraging investment in these financial instruments.

Insurance Commission: Insurance agents and brokers will benefit from an increased TDS exemption limit on commissions, rising from Rs 15,000 to Rs 20,000, thereby improving cash flow for professionals in the insurance sector.

Additional TDS Adjustments

Cryptocurrency Transactions: A 1% TDS will now be applied to cryptocurrency and NFT transactions under Section 194S, aligning with India's virtual digital asset regulatory framework.

Freelancers and Gig Workers: The TDS threshold for freelancers has been adjusted, with a 5% deduction applicable on earnings exceeding Rs 50,000, down from the previous Rs 1 lakh limit, affecting cash flow for gig economy participants. 

Implications for Taxpayers

These reforms are designed to reduce the compliance burden and enhance cash flow for individuals and businesses. Taxpayers should assess how these changes impact their financial activities and ensure adherence to the new provisions to avoid penalties. Consulting with financial advisors or tax professionals is recommended to navigate these updates effectively.
 

By understanding and adapting to these revised TDS thresholds, taxpayers can better manage their obligations and optimize their financial planning under the new tax regime.