look news india
With the implementation of the New Income Tax Act 2025, there was a big question in the minds of crores of bank account holders and small investors – will now tax (TDS) be deducted on the nominal interest received from the bank? To clear up this confusion, the Income Tax Department has issued an official clarification. The department has clarified that despite the change in the wording of the rules, there has been no material change in the limit and process of tax exemption available to the common man. Small investors will continue to get relief on bank interest as before.
What are the current rules and limits of TDS?
According to the new clarification of the Income Tax Department, Tax Deducted at Source (TDS) is deducted on the interest received from the bank only when it crosses a certain financial limit. Currently these limits are as follows:
ordinary citizens: If the total interest received from bank FD or savings account in a financial year ₹40,000 If it exceeds Rs. 10%, TDS is deducted.
Senior Citizens: This limit is for the elderly ₹50,000 Has been decided.
The department has clarified that these limits will remain effective even under the new law and there will be no deduction on interest less than this.
Why was there controversy over Section 393(1) of the new Act 2025?
The main reason for confusion is the new law Section 393(1) Was. Banking institutions were mentioned in great detail in the old Income Tax Act, whereas in the new draft it has been abbreviated. Due to this, investors felt that perhaps co-operative banks or some selected financial institutions are now out of the scope of TDS exemption. The tax department has now made it clear that Banking Regulation Act 1949 All the institutions coming under this will be considered as ‘Banking Companies’ and the same old rules will apply to them.
What will be the benefit to the common man?
This clarification of the government will directly benefit those lakhs of middle class families and senior citizens dependent on interest after retirement, who were worried about the deduction of TDS on their deposits.
No extra burden: Small investors will not have to face unnecessary tax cuts on the interest received on their deposits.
Option of Form 15G/15H: If your total annual income does not come under the tax net, you can still go to the bank. Form 15G (General Citizen) or 15H (Senior Citizen) You can stop TDS deduction by depositing.
IT department’s advice: Don’t panic, the rules are the same
The Income Tax Department has assured taxpayers that the new law is aimed at simplifying the tax system and not at increasing the tax burden on the common man. If your bank interest is within the prescribed limit, the bank cannot deduct TDS without your permission or prior notice. Customers are advised to check their bank statements regularly and in case of any discrepancy, immediately contact the bank manager or tax advisor.