Effective April 1, 2025, several key TDS (Tax Deducted at Source) thresholds in India are increasing to reduce the compliance burden for taxpayers. Key changes include raising the TDS threshold on dividends and mutual fund income to ₹10,000, while bank FD interest exemption thresholds rise to ₹50,000 for regular citizens and ₹1 lakh for senior citizens.
The TDS exemption limit for dividend and mutual fund income will be raised to Rs. 10,000/- starting April 2025. This means TDS will only be deducted when your total earnings exceed Rs. 10,000/- per year, making tax deductions less frequent.
2. How does the new TDS rule benefit general citizens? The exemption limit for TDS on interest income has been increased from ₹40,000 to ₹50,000, reducing the tax burden on small depositors.
The threshold for TDS on interest income for senior citizens has now been doubled from ₹50,000 to ₹1 lakh per financial year. This step aims to ease the tax compliance burden for elderly investors, allowing them to enjoy higher earnings from fixed deposits and savings instruments without unnecessary deductions.
The act has relaxed the TDS exemption limit for senior citizens. TDS will not be deducted from the FD interest of senior citizens as long as it does not exceed Rs. 1 lakh during the financial year.
The new senior tax exemption, part of the One Big Beautiful Bill Act (OBBB) for the 2025 tax year (filed in 2026), offers an additional $6,000 federal income tax deduction for individuals 65+, or $12,000 for couples where both are 65+, available on top of existing senior standard deductions and even if you itemize. This bonus deduction reduces taxable income but phases out for higher earners, fully disappearing for single filers with incomes over $175,000 and joint filers over $250,000.
The exemption limit for TDS on rent under section 194-I and 194IB is Rs 50,000 per month. Tax is deducted under Section 194I without including the GST. If there is a Nil tax applicable to your income and you are receiving rent as income, you can file Form 15G or Form 15H for non-deduction of TDS.
Under section 194I, a 2% TDS rate applies to rent payments made for plant, machinery, or equipment. The TDS must be deducted if the annual rent exceeds Rs. 2.4 lakh. For other types of rent, such as for land or buildings, the TDS rate is 10%.
Rate of TDS : TDS is to be deducted at the rate of 2 percent on payments made to the supplier of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds two lakh ifty thousand rupees.
People who turned 65 by Dec. 31, 2025, are eligible for the new deduction, according to the IRS. The deduction provides $6,000 for each qualifying individual, or $12,000 for married couples who both qualify. The tax break is subject to income limits.
For FY 2025-26, the current TDS exemption limit has been hiked to ₹50,000 for regular citizens and ₹1 lakh for senior citizens. For example, if you earn an FD interest of ₹60,000, the bank would deduct TDS of 10%.
The U.S. Department of the Treasury, through its Financial Crimes Enforcement Network (FinCEN), mandates that banks report cash transactions of $10,000 or more.
Under the new rules, effective from April 1, 2025, TDS will only be applicable on individual winnings exceeding Rs 10,000. For example, if a person wins Rs 8,000 three times, totaling Rs 24,000, no TDS will be deducted as each winning is below the Rs 10,000 threshold.
Let's say your annual salary is ₹12,00,000.
TDS Filing Software: Avoid These 7 Common Mistakes for Accuracy
Explanation: The tax shall be deducted at the rate of 2% under section 194-IB if the rent paid or payable exceeds Rs. 50,000 per month or part of the month.
Individuals or HUFs must deduct TDS if their rent payment exceeds ₹50,000 per month under Section 194IB, with a 2% TDS rate. The TDS rate varies depending on the type of rented asset: 2% for plant and machinery and 10% for land, buildings, or furniture.
Log on to website e-filing portal ( https://www.incometax.gov.in/iec/foportal/ ).
TDS on rent payment applies if the rent exceeds ₹ 50000 per month. If your annual rent is within this limit, you do not need to deduct TDS. Individuals and HUFs are required to deduct TDS on rent only if their business is subject to a tax audit under income tax laws.
How do I pay no taxes on rental income in the US? Minimizing or eradicating taxes on rental income involves employing strategies such as 1031 exchanges, utilizing self-directed IRAs, claiming depreciation and deductions, leveraging equity through borrowing, deferring sales, and potentially becoming a real estate agent.
The new senior tax deduction of up to $6,000 for single filers and $12,000 for joint filers, was created to help cover taxes on Social Security benefits. Taking the new senior deduction helps to reduce your taxable income, which can mean less tax or potentially an even bigger tax refund when you file your return.