New TDS rules from Sept 25: CA explains big relief for senior citizens, small investors. Check details

In a move aimed at easing the tax burden and improving cash flow for households, the government has introduced significant changes to Tax Deducted at Source (TDS) rules effective from September 25, 2025. The changes, which cover interest on deposits, dividends, commissions, and lottery winnings, are expected to benefit senior citizens, middle-class families, and small investors. 

Announcing the update on X (formerly Twitter), chartered accountant Nitin Kaushik wrote, “These changes will put more cash in your hand instead of locking it in refunds.” 

Key highlights

• Senior Citizens: The annual interest exemption limit for TDS has been doubled from ₹50,000 to ₹1,00,000. For example, if a retiree earns ₹80,000 in annual interest, no TDS will be deducted. Kaushik called it a “big relief for retirees relying on deposits for daily expenses.” 

• Non-Senior Citizens: The exemption limit on FD/RD interest has been raised from ₹40,000 to ₹50,000, providing more liquidity for middle-class families. 

• Lottery Winnings: TDS will now apply only if a single winning exceeds ₹10,000. Previously, the rule considered the total annual winnings, which penalised frequent small-ticket winners. 

• Insurance Commissions: The TDS threshold has increased from ₹15,000 to ₹20,000, benefitting part-time and small agents who earlier struggled with refunds. 

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• Dividend Income: The exemption limit has doubled from ₹5,000 to ₹10,000, encouraging small investors to stay invested in equities and mutual funds. 

Why it matters 

For fixed deposit and recurring deposit investors, the changes mean: 

• Less TDS deducted at source 
• Higher take-home interest credited monthly 
• Reduced hassle of seeking refunds during income tax filing 
• Improved household cash flow for day-to-day expenses 

Kaushik noted, “For small investors, this is a big behavioral nudge. When money stays in your hand instead of refunds, you’re more likely to reinvest, spend wisely, or save better.” 

The updated rules make the TDS regime fairer, with clear benefits for seniors, families, and small investors. By easing liquidity pressure, the government hopes to boost both savings and consumption, creating a win-win for households and the economy.