There was good news in the Union Budget 2025 for Indian seniors and taxes. One of the most important changes is that the limits on TDS (Tax Deducted at Source) have been raised. This will help retirees, pensioners, renters, and regular investors. These changes could make a big difference in how much money you have coming in, whether you depend on rent and National Savings Scheme (NSS) withdrawals or interest from fixed savings.
TDS Limits in Budget 2025: What’s Different This Year?
Here are the major changes that affect you starting from April 1, 2025:
| Policy Area | Old TDS Limit | New TDS Limit | Who Benefits? |
|---|---|---|---|
| Interest Income (Senior Citizens) | ₹50,000 | ₹1,00,000 | Retirees with FDs or RDs |
| Interest Income (Others) | ₹40,000 | ₹50,000 | Regular depositors |
| Rental Income | ₹2.4 lakh/year | ₹6 lakh/year | Landlords & senior citizens |
| NSS Withdrawals | Taxable | Tax-Free (after Aug 29, 2024) | Long-term NSS investors |
| Dividend & MF Income | ₹5,000 | ₹10,000 | Investors |
| Insurance & Brokerage Commission | ₹15,000 | ₹20,000 | Agents, Brokers |
| Professional Fees (Section 194J) | ₹30,000 | ₹50,000 | Freelancers, Consultants |
| Horse Racing/Lottery Winnings | ₹10,000/year | ₹10,000 per transaction | Gamers & Bettors |
According to a report by The Economic Times, the Union Budget 2025 has introduced significant revisions to TDS thresholds, offering tax relief on interest income, rent, dividends, and more. These changes are expected to simplify compliance and improve cash flow for both senior citizens and regular taxpayers.
How These TDS Reforms Help You Save Money
1. Double the TDS Limit on Fixed Deposit Interest
Senior citizens now benefit from a revised exemption limit of ₹1 lakh per year on interest income from Fixed Deposits (FDs) and Recurring Deposits (RDs). Previously, any interest beyond ₹50,000 attracted 10% TDS. With the new limit, TDS will be deducted only if the interest exceeds ₹1 lakh in a financial year.
Example:
Mrs. Rani, a 66-year-old retired teacher, earns ₹92,000 annually from her bank FDs.
- Old Rule: ₹4,200 (10% on ₹42,000) was deducted as TDS
- New Rule: No TDS deducted — full ₹92,000 is credited to her account
2. TDS on Rental Income Increased to ₹6 Lakh
Landlords now get more breathing space. Earlier, tenants were required to deduct 10% TDS on rent payments if the annual rent exceeded ₹2.4 lakh. As per the new rule, the threshold has been increased to ₹6 lakh per year, offering significant cash flow relief.
Example:
Mr. Iqbal, a retired bank manager, earns ₹5.2 lakh per year in rental income.
- Old Rule: ₹28,000 (10% of ₹2.8 lakh over the limit) was deducted as TDS
- New Rule: ₹0 TDS — he keeps the entire rental income
3. Tax-Free NSS Withdrawals from August 29, 2024
Withdrawals from National Savings Scheme (NSS) accounts made after August 29, 2024, will be completely tax-exempt. Previously, retirees lost a large chunk of their maturity amount due to TDS and applicable taxes.
Example:
Mrs. Fernandes, a 70-year-old investor, plans to withdraw ₹8 lakh from her NSS account.
- Old Rule: She would have paid ₹2.4 lakh in tax (30% of ₹8 lakh)
- New Rule: ₹0 tax — she receives the entire ₹8 lakh without any deductions
Smart Tips to Maximize Your TDS Benefits
1. Submit Form 15H
If your total annual income is below ₹3 lakh (or ₹5 lakh for 80+ seniors), submit Form 15H to your bank. This ensures no TDS is deducted, and you won’t need to file for a refund later.
2. Diversify with Tax-Free Investments
Spread your money across:
- Senior Citizens’ Savings Scheme (SCSS)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Tax-Free Bonds
These options offer good returns and keep your tax liability low.
3. Withdraw NSS Funds After August 29, 2024
Plan your withdrawals wisely. If you’re nearing retirement or already retired, wait until this date to enjoy 100% tax-free NSS withdrawals.
4. Use Section 80C Deductions
Reduce your taxable income by investing in:
- 5-Year Tax Saver FDs
- PPF Accounts
- LIC Premiums
You can claim up to ₹1.5 lakh under Section 80C.
Bonus Updates in Budget 2025: Other TDS Reforms Worth Noting
Section 194T – TDS on Partner’s Remuneration
Firms and LLPs must now deduct 10% TDS if they pay more than ₹20,000/year to a partner (as salary, commission, or interest on capital).
Section 206AB – Scrapped!
No more higher TDS for non-filers of income tax returns. Businesses no longer need to check the ITR filing status before deducting TDS, reducing compliance hassles.
Why These TDS Changes Matter in 2025
- Higher Take-Home Income: Especially for retirees and fixed-income earners.
- Fewer Refund Delays: No need to wait months to reclaim deducted TDS.
- Simplified Compliance: No need for tedious ITR-verification before deducting tax.
- More Monthly Rent in Hand: No TDS till ₹50,000/month on rentals.
- Better Investment Returns: With tax-free NSS and higher 80C opportunities.
Need Help with TDS Filing or Planning?
Platforms like IndiaFilings can help you manage TDS, file your forms, and stay compliant with the new tax rules. Stay ahead with the latest tax-saving strategies and make retirement worry-free!
Conclusion
The TDS updates introduced in Budget 2025 mark a significant step toward empowering India’s retirees, working professionals, and everyday investors. For senior citizens, or anyone managing finances on their behalf, these reforms can lead to a noticeable improvement in both monthly cash flow and overall annual savings. To fully benefit from these changes, it’s important to review your existing fixed deposits and rent agreements, ensure timely submission of the correct forms such as Form 15H or 15G to avoid unnecessary deductions, explore low-tax or tax-free investment avenues like SCSS or PMVVY, and strategically plan NSS withdrawals after August 29, 2024, when they become fully tax-exempt.
Frequently Asked Questions
What is the new TDS limit for senior citizens on interest income?
From April 1, 2025, senior citizens can earn up to ₹1,00,000 in interest income from fixed deposits and recurring deposits without any TDS deduction. This is a significant increase from the previous limit of ₹50,000. It ensures that retirees have better monthly cash flow and don’t need to wait for TDS refunds.
Has the TDS threshold for rental income changed?
Yes, it has. The TDS limit on rental income has been raised from ₹2.4 lakh per year to ₹6 lakh per year. This means tenants will now deduct TDS only if the rent exceeds ₹50,000 per month. This is especially helpful for senior citizens and landlords who rely on rent for monthly expenses.
Are withdrawals from the National Savings Scheme (NSS) still taxable?
Not anymore — but with a condition. If you withdraw from your NSS account after August 29, 2024, the entire amount will be tax-free. Previously, withdrawals were taxed at up to 30%, which reduced retirement savings. This change is a huge benefit for long-term savers.
What should I do to avoid TDS if my income is below the taxable limit?
If your total income is below the taxable threshold (₹3 lakh for those aged 60+ and ₹5 lakh for those above 80), you should submit Form 15H to your bank. This prevents unnecessary TDS deduction and avoids the hassle of claiming refunds later.
How do the new TDS rules affect dividend and mutual fund income?
As per the updated rules, TDS on dividend income and mutual fund units will now be deducted only if annual income exceeds ₹10,000, instead of the earlier ₹5,000 limit. This helps small investors retain more earnings.
