ITR Filing FY25: Here’s How Much TDS Will Be Deducted on Your Investment Income

If you’ve invested in stocks, bonds, REITs, or mutual funds, you may have noticed your income credit is sometimes less than expected. This is because of TDS (Tax Deducted at Source), where the government collects part of your tax upfront from your investment income.

As you prepare for ITR filing in FY25, it’s important to understand how much TDS the government deducts from different types of investment income and what new rules apply.

Understanding TDS Leviable on Share Buybacks and Dividend Income

Earlier, companies deducted TDS at 10% if your dividend income from one company exceeded ₹5,000 annually. From FY25, this limit is now ₹10,000.

However, buybacks of shares are now treated as dividend income. For example, if you get ₹9,000 dividend and ₹15,000 from buybacks from the same company, the total ₹24,000 crosses the ₹10,000 limit. The company will deduct TDS of 10% on the entire ₹24,000.

Important: If your PAN is not updated, the TDS rate doubles to 20%.

TDS Up To 10% Applicable on Interest Income from Bonds & Debentures

Interest income from listed bonds and debentures now has a ₹10,000 threshold per issuer (up from ₹5,000). If you earn more, TDS at 10% applies.

Some government tax-free bonds still remain exempt from TDS, but you must declare the income while filing your return.

REITs & InvITs: Multiple Income Types, Multiple TDS Rules

Payouts from REITs and InvITs include different components, including interest, rental income, and dividends. This is how they are taxed by the government:

Always check your payout statement to know which parts have TDS deducted.

Mutual Funds: Dividends Have TDS, Capital Gains Don’t

Dividends from mutual funds attract 10% TDS if you receive over ₹10,000 in a year from the same AMC. However, capital gains from selling mutual fund units are not subject to TDS for resident investors but will be taxable according to holding period rules.

ITR Filing FY25: Common TDS Pitfalls to Avoid

• TDS is part of your tax, not the whole tax. If your total tax is higher, you need to pay the balance.
• Always check your TDS credit with Form 26AS.
• Report gross income (before TDS), not the net amount in your ITR.
• File Form 15G/15H if eligible to avoid unnecessary TDS.
• Keep PAN and KYC updated to avoid higher TDS rates.
• For joint holdings, TDS is deducted in the first holder’s name, which can cause mismatches.

Read more: Income Tax Department Sets Sept 30, 2025 as Deadline for TDS/TCS Relief on Inoperative PANs.

Conclusion

The government has raised some TDS thresholds but also expanded the income sources it taxes upfront, like buybacks. To avoid surprises during ITR filing, keep your PAN/KYC updated, track income from each source carefully, and reconcile your TDS with actual income records.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.