From 1 April 2025, a bank, co-operative bank, or post office will not deduct tax at source on the interest it pays a senior citizen until that interest crosses ₹1 lakh in the financial year, doubled from the earlier ₹50,000, but this is only the point at which TDS starts, not a limit up to which the interest is tax free.
Quick answer: The Finance Act 2025 doubled the TDS threshold under Section 194A for senior citizens, aged 60 and above, from ₹50,000 to ₹1 lakh a year, effective 1 April 2025. So the bank stops deducting TDS on interest until it exceeds ₹1 lakh. This is a deduction trigger, not a tax exemption. The interest is still part of your taxable income. A separate deduction, under Section 80TTB, is what actually reduces the tax on it.
The most common mistake is to read the ₹1 lakh figure as tax free income. It is not. Keep two ideas apart.
| Provision | What it does | The number |
|---|---|---|
| Section 194A TDS threshold | Sets when the bank must start deducting TDS on your interest | ₹1 lakh a year from 1 April 2025 |
| Section 80TTB deduction | Reduces the interest income actually taxed in your hands | ₹50,000 a year |
Section 194A only decides whether the bank cuts TDS before paying you. Section 80TTB is the real relief that lowers your tax. Even if no TDS is deducted, you must still add the interest to your income and claim the 80TTB deduction when you file.
The Finance Act 2025 raised the Section 194A threshold for senior citizens.
The change eases cash flow, because money is not held back as TDS on smaller interest. It does not change how much tax you finally owe.
Many senior citizens have total income below the level at which any tax is due. If that is you, you can stop TDS at source.
TDS is not lost money. If it was cut and your final tax is lower, you claim it back.
For the deduction that actually cuts your tax on this interest, read the Section 80TTB deduction for senior citizens. To frame a written query to a bank or the tax department, The RTI Playbook is a useful companion.
Real-life example. Dr. Shrawan Kumar Pathak, aged 70, earns ₹90,000 a year in interest from bank fixed deposits. In 2024 the bank deducted TDS because his interest crossed the old ₹50,000 threshold, and he claimed it back when filing. From the financial year 2025 to 2026, because the threshold is now ₹1 lakh, the bank deducts no TDS on his ₹90,000 interest. He still adds the ₹90,000 to his income and claims the ₹50,000 Section 80TTB deduction, so only ₹40,000 is taxable before his other exemptions.
From 1 April 2025, banks deduct TDS on a senior citizen's interest only after it crosses ₹1 lakh in the financial year, doubled from the earlier ₹50,000, under Section 194A.
No. It is only the point at which the bank starts deducting TDS. The interest is still part of your taxable income. The relief that actually lowers your tax is the Section 80TTB deduction of ₹50,000.
The Finance Act 2025 amended the Section 194A threshold for senior citizens, effective 1 April 2025, that is, for the financial year 2025 to 2026.
A resident individual aged 60 years or above during the financial year.
Section 194A decides when the bank deducts TDS, now ₹1 lakh for senior citizens. Section 80TTB is a deduction of up to ₹50,000 that reduces the interest actually taxed in your hands when you file your return.
Submit Form 15H to the bank at the start of the year, but only if your total tax for the year genuinely works out to nil.
Yes. File your income tax return, report the interest, claim the Section 80TTB deduction, and any excess TDS is refunded to you.
Yes. The Section 194A threshold applies to interest paid by banks, co-operative banks, and post office deposits to senior citizens.