Budget 2025 proposes Higher TDS Threshold for Bank FD Interest
The finance minister announced a change affecting non-senior citizens with interest income from bank fixed deposits
Thе Uniоn Вudget 2025 wаs presented by thе Finаnce Minister, Nirmаlа Sithаrаmаn, on February 1st, 2025, аt 11:00 а.m., befоre thе Pаrliаment. Thе Uniоn Вudget is thе аnnuаl finаnciаl stаtement thе Gоvernment of Indiа prеsеnts, outlining its estimаted revenue аnd expenditure fоr thе upcоming fiscаl yeаr аnd serving аs а roаdmаp fоr thе country's еconomic prioritiеs.
The finance minister announced a change affecting non-senior citizens with interest income from bank fixed deposits. The Tax Deducted at Source (TDS) threshold on interest income has been increased from ₹40,000 to ₹50,000. Previously, if a non-senior citizen’s interest income from bank fixed deposits exceeded ₹40,000 in a financial year, banks were mandated to deduct TDS at 10%. In the revised threshold of ₹50,000, TDS will now be deducted only if interest income exceeds this ₹50,000 limit.
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Many individuals may find filing easier now that their tax liability has been reduced or erased. Because companies won't have to ask for reimbursement for TDS deductions on small amounts, administrative expenses will be lower for those whose income is within the new cap. The government claims that this adjustment is intended to promote more significant savings. If the exemption limit is increased, more people will choose fixed deposits as a reliable investment option because a more substantial portion of their profits will initially be tax-free.
This policy change is consistent with the government's efforts to promote depositors' savings and financial stability. Reducing TDS rules helps middle-class incomes and small investors while maintaining tax compliance. The higher barrier is expected to improve economic stability by encouraging more people to save in secure options like fixed deposits.
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