The Union Budget 2025 has introduced some welcome changes, especially around TDS on bank interest. If you’ve ever had your interest income surreptitiously pruned by taxes, there’s reason to rejoice. Thanks to increased exemption thresholds and streamlined rules, it’s now simpler to let your savings grow without surprise deductions nibbling away at them. The increase in TDS thresholds is the government’s effort to ease the tax burden on small taxpayers.
Here are some tips on how to make the most of the new TDS rules:
The government has raised the TDS exemption limit on interest earned from bank and post office deposits. Until this year, TDS was deducted if interest exceeded INR 40,000 (INR 50,000 for senior citizens). This limit has now been increased, so be sure to check the latest threshold and spread your deposits accordingly to stay below it when possible.
- Update PAN Card Information
Failure to link your PAN with your bank account or not having the accurate information could result in TDS being deducted at a higher rate.
- Consider Splitting Deposits Across Institutions
Distributing your fixed deposits across multiple banks can help you stay within the revised TDS limit at each institution, helping reduce or eliminate automated deductions. You have to make sure the interest earned from each FD does not cross the TDS deduction threshold per financial year. You could also invest in multiple FDs under the name of different family members with a lower or no taxable income. Thus, the interest earned is either completely tax-free or taxed at a lower slab rate.
These two self-declaration forms are used to prevent TDS on fixed deposit interest if your total income is below the taxable limit. Filing Form 15G (for non-seniors) or 15H (for seniors) with your bank can prevent TDS from being deducted altogether. But remember, it must be submitted every financial year and on time.
- Utilize Extended Time frames for TDS Corrections
The time limit for revising TDS returns has been extended to six years. This provides taxpayers with a longer window to rectify any discrepancies in their TDS filings.
- Work with a Tax Consultant
With new rules and many layers of legal nuances, it’s always advisable to work with a tax consultant. A tax consultant or a financial advisor can help you make this process much smoother by ensuring you fully comply with the authorities while also saving you as much of your hard-earned money as possible.
Make your savings work harder for you by following these tips, and by always staying up to date with any developments related to taxes or interest rates.
ALSO READ: What the New TDS Changes Mean For Your Savings
Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.