TDS, Tax Deducted at Source, is a type of tax that government introduced to collect the tax of an employee from the source itself. This promotes regular payment of tax where the employer cuts a portion of the employee’s pay and deposit to the government without the involvement of employee. The rates are different for everyone, Employees with annual salary over Rs. 2.5 lakh, are applicable with 5%, 10% or even more based on the regulations with that firm. TDS Rules have made tax payment easy to individuals.

Who Should Pay TDS?

TDS, Tax deducted at source is applicable to individuals, companies, and entities making specific payments such as salary, interest, rent, commission, or professional fees. The deducted amount, TDS is credited against the payee’s tax liability and adjusted during income tax filing to avoid huge amount to pay once.

Previous TDS guidelines:

If you earned interest from Fixed Deposits (FDs):

People under 60 years didn’t have to pay TDS if their gained interest was ₹40,000 or less in a year.

Senior citizens (60 years and above) didn’t have to pay TDS if their interest was ₹50,000 or less in a year.

If you earned dividends from mutual funds or stocks:

TDS was only deducted if the dividends earned were more than ₹5,000 in a year.

If you were an insurance agent and received commission:

TDS wasn’t deducted if your commission was ₹15,000 or less in a year.

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April 2025 TDS Rules:

The government has made significant changes in TDS to make taxes easier on payers and provide relief. Here’s how the new rules work from April 2025:

For Senior Citizens:

Senior citizens (60 years and above) don’t have to pay TDS on interest from Fixed Deposits (FDs), Recurring Deposits (RDs), and similar investments if the total interest in a year is ₹1 lakh or less. Earlier, this limit was ₹50,000.

For people Under 60:

If you earn interest from FDs or similar investments, TDS won’t be deducted unless the total interest in a year is more than ₹50,000. Earlier, this limit was ₹40,000.

For Mutual Fund Dividends:

TDS will only be deducted on dividend income from mutual funds or stocks or any investments, if it’s more than ₹10,000 in a year. This limit was previously ₹5,000.

For Lottery Winnings:

TDS will be deducted only if you win more than ₹10,000 in a single lottery prize. Earlier, winnings were added up from multiple lotteries to calculate TDS.

For Insurance Agents:

If you are an insurance agent, TDS won’t apply until your total commission is more than ₹20,000 in a year. Earlier, this limit was ₹15,000.

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