Senior Citizen FD: New 1 Lakh TDS Limit From 2025
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 one thing people get wrong
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.
What changed in 2025
The Finance Act 2025 raised the Section 194A threshold for senior citizens.
- Old rule. A bank deducted TDS once your interest from it crossed ₹50,000 in the year.
- New rule from 1 April 2025. The bank deducts TDS only once your interest crosses ₹1 lakh in the year.
- Who benefits. Senior citizens aged 60 and above earning interest from bank, co-operative bank, or post office deposits. Fewer of them will now face TDS on modest deposits.
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.
If your income is below the taxable limit
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.
- Submit Form 15H. A senior citizen whose estimated total tax for the year is nil can give Form 15H to the bank, so it does not deduct TDS even above the threshold. See how to submit Form 15G and 15H.
- Give it early in the year. Submit at the start of the financial year and to each bank branch where you hold deposits.
- Do not file a false declaration. Only submit Form 15H if your tax genuinely works out to nil, because a wrong declaration has consequences.
If TDS was deducted but you owe no tax
TDS is not lost money. If it was cut and your final tax is lower, you claim it back.
- It shows in Form 26AS and AIS. The deducted TDS is credited against your PAN.
- File your return to claim the refund. Report the interest, claim the Section 80TTB deduction, and the excess TDS comes back as a refund. See how to file your income tax return online.
- Keep interest certificates. Ask each bank for an interest certificate so your figures match the tax statement.
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.
Frequently asked questions
What is the new TDS limit on senior citizen FD interest?
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.
Does the ₹1 lakh limit mean my interest is tax free up to that amount?
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.
Which law made this change?
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.
Who is a senior citizen for this rule?
A resident individual aged 60 years or above during the financial year.
What is the difference between Section 194A and Section 80TTB?
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.
How can I stop the bank from deducting TDS if I owe no tax?
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.
Can I get back TDS that was already deducted?
Yes. File your income tax return, report the interest, claim the Section 80TTB deduction, and any excess TDS is refunded to you.
Does this cover post office and co-operative bank interest?
Yes. The Section 194A threshold applies to interest paid by banks, co-operative banks, and post office deposits to senior citizens.
Sources
- Press Information Bureau, Budget 2025 to 2026, direct tax proposals, TDS limit on interest for senior citizens doubled from ₹50,000 to ₹1 lakh https://www.pib.gov.in/PressReleasePage.aspx?PRID=2098362
- Income Tax Act, 1961, Section 194A as amended by the Finance Act, 2025 https://www.indiacode.nic.in
- Income Tax Act, 1961, Section 80TTB, deduction on interest for senior citizens https://www.indiacode.nic.in
Related articles
Reader signal
Was this article useful?
Tap once if it helped you. These counters show other citizens which pages are worth reading.