Senior Citizens’ Interest Limit Doubled, Rent Threshold Raised: FM issues Status of TDS Rationalisation
The rationalisation was promised by reducing the number of rates and revising thresholds, with the changes effect from April 1, 2025.
The Ministry of Finance has issued a “Progress So Far” status note on its Budget 2025-26 promise to rationalise Tax Deduction at Source (TDS).
The rationalisation was promised by reducing the number of rates and revising thresholds, with the changes effect from April 1, 2025.
Through amendments to multiple provisions of the Income-tax Act, 1961, the government intended to reduce the number of transactions subjected to TDS, to bring uniformity in deductions, especially to small taxpayers receiving smaller payments.
The announcement reads that “I propose to rationalise Tax Deduction at Source (TDS) by reducing the number of rates and thresholds above which TDS is deducted. Further, threshold amounts for tax deduction will be increased for better clarity and uniformity. The limit for tax deduction on interest for senior citizens is being doubled from the present Rs. 50,000 to Rs. 1lakh. Similarly, the annual limit of Rs. 2.40 lakh for TDS on rent is being increased to Rs. 6 lakh. This will reduce the number of transactions liable to TDS, thus benefitting small tax payers receiving small payments.”
With regard to the progress so far, the ministry published the following:
| Nature of Payment | Section | Old Threshold | New Threshold |
| Mutual Fund Units | 194K | Rs. 50,000 | Rs. 50,000 |
| Professional/Technical fees | 194K | Rs. 30,000 | Rs. 50,000 |
| Insurance Commission | 194D | Rs. 15,000 | Rs. 50,000 |
| Insurance Commission | 194H | Rs. 15,000 | Rs. 20,000 |
| Lottery/Horse Race Winnings | 194B/194BB | Rs. 10,000 (Aggregate) | Rs. 10,000 |
| Interest Income (Senior Citizens) | 194A | Rs. 50,000 | Rs. 1,00,000 |
| Rental Income | 194-IA | Rs.2,40,000 | Rs.6,00,000 (Structured as 50,000 per month or part of a month) |
| Interest on Securities | 193 | Nil | Rs.10,000 |
| Dividend Income | 194 | Rs.5,000 | Rs.10,000 |
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