Budget 2025 proposes raising the TDS threshold on interest earned from fixed deposits by non-senior citizens from Rs 40,000 to Rs 50,000 per annum, effective April 1, 2025

TDS limit for interest income from bank FD hiked from Rs 40,000 in Budget 2025: Check details TDS is deducted by banks on interest exceeding specified limits, with current rules imposing a 10% rate if PAN is available and 20% if not

Budget 2025 proposes to increase the limit for tax deduction at source (TDS) on interest earned by general (non-senior) citizens from fixed deposits from banks from the present Rs 40,000 to Rs 50,000 per financial year. These amendments will take effect from the 1st day of April 2025.

Budget with ET
Union Budget 2025 Live Updates
Income Tax Budget 2025 Live Updates
Sensex Today | Stock Market LIVE Updates
What is TDS
Banks are required to deduct tax at source when interest paid to account holders exceeds specified threshold in one financial year. This threshold is different for senior citizens and non-senior citizens. Currently, banks are required to deduct TDS at the rate of 10% from interest paid on fixed deposits to account holders if PAN is available.

It is proposed to increase the threshold for requirement to deduct tax at source in section 194A as below.

Payer	Current threshold to deduct TDS	Proposed threshold to deduct TDS
A banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act)	Rs. 40,000/-	Rs. 50,000/-
A co-operative society engaged in carrying on the business of banking	Rs. 40,000/-	Rs. 50,000/-
on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf	Rs. 40,000/-	Rs. 50,000/-
Any other case	Rs. 5,000/-	Rs. 10,000/-
A cooperative society referred to in clause (v) and clause (viia) of sub-section (3) of section 194A	Rs. 40,000/-	Rs. 50,000/-

Source: Budget Memorandum

Artificial Intelligence(AI)
Java Programming with ChatGPT: Learn using Generative AI
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Basics of Generative AI: Unveiling Tomorrows Innovations
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Generative AI for Dynamic Java Web Applications with ChatGPT
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Mastering C++ Fundamentals with Generative AI: A Hands-On
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Master in Python Language Quickly Using the ChatGPT Open AI
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Performance Marketing for eCommerce Brands
By - Zafer Mukeri, Founder- Inara Marketers
Office Productivity
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
By - Metla Sudha Sekhar, IT Specialist and Developer
Finance
A2Z Of Money
By - elearnmarkets, Financial Education by StockEdge
Marketing
Modern Marketing Masterclass by Seth Godin
By - Seth Godin, Former dot com Business Executive and Best Selling Author
Astrology
Vastu Shastra Course
By - Sachenkumar Rai, Vastu Shashtri
Strategy
Succession Planning Masterclass
By - Nigel Penny, Global Strategy Advisor: NSP Strategy Facilitation Ltd.
Data Science
SQL for Data Science along with Data Analytics and Data Visualization
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
AI and Analytics based Business Strategy
By - Tanusree De, Managing Director- Accenture Technology Lead, Trustworthy AI Center of Excellence: ATCI
Web Development
A Comprehensive ASP.NET Core MVC 6 Project Guide for 2024
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Digital Marketing Masterclass by Pam Moore
By - Pam Moore, Digital Transformation and Social Media Expert
Artificial Intelligence(AI)
AI-Powered Python Mastery with Tabnine: Boost Your Coding Skills
By - Metla Sudha Sekhar, IT Specialist and Developer
Office Productivity
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Digital marketing - Wordpress Website Development
By - Shraddha Somani, Digital Marketing Trainer, Consultant, Strategiest and Subject Matter expert
Office Productivity
Mastering Google Sheets: Unleash the Power of Excel and Advance Analysis
By - Metla Sudha Sekhar, IT Specialist and Developer
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, IT Specialist and Developer
Finance
Financial Literacy i.e Lets Crack the Billionaire Code
By - CA Rahul Gupta, CA with 10+ years of experience and Accounting Educator
Data Science
SQL Server Bootcamp 2024: Transform from Beginner to Pro
By - Metla Sudha Sekhar, IT Specialist and Developer

Who deducts TDS on fixed deposit?
According to the HDFC Life website, As TDS is the tax deducted on income at source, any financial institution or bank offering investments in Fixed Deposit schemes is responsible for deducting TDS on fixed deposit interest. As a general practice, the TDS on Fixed Deposit interest is an automatic deduction that takes place at the end of every financial year.”

What are the Rules and Regulations of TDS on FDs?
According to the HDFC Life website, "Certain guidelines are issued by the Income Tax Department that must be abided by when it comes to the deduction of TDS on Fixed Deposit interest. The rules and regulations of TDS on FD are as follows:

TDS on FD is applicable only if the interest earned on fixed deposits exceeds the threshold limits in a given financial year.
The bank or the financial institution in which the Fixed Deposit is held is responsible for deducting TDS on FD.
TDS on FD is deducted at a flat rate of 10% rate in a given fiscal year where PAN details are available.
The rate of TDS on Fixed Deposit interest increases to 20% if the PAN details of the investor are not available.
In the case of Fixed Deposits held in joint names, the TDS on FD is made for the primary account holder. The second holder is not liable for any deductions relating to TDS on FD.
The TDS on FD deductions happen at the end of each financial year when the interest is credited and not once at the time of the final maturity of the Fixed Deposit.
Interest earned on Tax Saver FD is also subject to TDS deduction.
All TDS deductions are reflected in the PAN account of the depositor."

This story originally appeared on: India Times - Author:Faqs of Insurances