TDS Calculation for Senior Citizens: New Rules Effective from April 1, 2025
The Union Budget 2025 introduced a major revision in TDS rules, increasing the TDS exemption limit on interest income. The government has taken this step to provide relief to senior citizens and reduce the tax burden on savings.
📌 Key Change:
✅ New TDS threshold for senior citizens: Increased from ₹50,000 to ₹1 lakh.
✅ New TDS threshold for individuals: Increased from ₹40,000 to ₹50,000.
✅ Effective Date: April 1, 2025.
Let’s understand how TDS is calculated on fixed deposits (FDs) and what this change means for taxpayers.
📢 Budget 2025: Revised TDS Exemption Limits on Interest Income
The new TDS thresholds apply to interest earned from:
✔ Bank deposits (FDs & RDs)
✔ Co-operative banks
✔ Post office savings schemes
| Category | Previous TDS Limit | New TDS Limit (FY 2025-26) |
|---|---|---|
| General Public | ₹40,000 | ₹50,000 |
| Senior Citizens (60+ years) | ₹50,000 | ₹1,00,000 |
✅ No TDS will be deducted if interest income remains below these limits in a financial year.
🚀 Why this change?
✔ More savings for senior citizens.
✔ Encourages long-term investments in FDs.
✔ Simplifies tax compliance for middle-class earners.
💰 How is TDS Calculated on Fixed Deposits?
TDS on FDs is deducted by banks if your interest income exceeds the exemption limit in a financial year.
📌 TDS Rates on FD Interest
| Condition | TDS Rate |
|---|---|
| PAN is provided | 10% |
| PAN is NOT provided | 20% |
📌 Example Calculation:
| Scenario | Interest Earned (₹) | TDS Deducted (₹) |
|---|---|---|
| General public, PAN provided | ₹60,000 | ₹1,000 (10%) |
| Senior citizen, PAN provided | ₹1,20,000 | ₹2,000 (10%) |
| General public, No PAN | ₹60,000 | ₹2,000 (20%) |
✅ If your total taxable income is below ₹2.5 lakh, you can avoid TDS by submitting Form 15G (for individuals) or Form 15H (for senior citizens).
📊 TDS Deduction Scenarios for Senior Citizens
Scenario 1:
🔹 A 65-year-old investor earns ₹85,000 interest from FDs.
🔹 Since the new TDS limit is ₹1,00,000, no tax will be deducted.
Scenario 2:
🔹 A 72-year-old investor earns ₹1,10,000 in interest from bank deposits.
🔹 TDS will be deducted on ₹10,000 at 10%, resulting in ₹1,000 tax deduction.
📌 Pro Tip: If your total income is below ₹3 lakh (senior citizens) or ₹5 lakh (super senior citizens, 80+ years), file Form 15H to avoid TDS deductions.
🚀 Final Takeaways: What You Should Do Next
✔ Senior citizens can now earn up to ₹1 lakh in interest without TDS.
✔ General taxpayers get a higher ₹50,000 TDS exemption.
✔ Submit Form 15H (seniors) or Form 15G (others) to avoid TDS if eligible.
✔ Keep PAN updated with banks to ensure only 10% TDS is deducted.
🔎 Have Questions on TDS for Senior Citizens?
💬 Drop your queries in the comments below! 🚀
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