TDS on FD: The government has given a big relief to the senior citizens of the country. Senior citizens now get a strong exemption in TDS on the interest rate of FD (TDS on FD). The government has implemented this decision from this financial year. This will benefit the entire family along with senior citizens.
Senior Citizen FD Interest Rates: The government has given a big relief to senior citizens. The government has increased the exemption for senior citizens in TDS on FD interest rates. If there is an elderly person in your house too, then investing in bank FD will now be more beneficial. If you have invested, then also there is good news for you.
The government has made a provision in the budget
The government has given a big relief to senior citizens in Budget 2025. The government has increased the limit of TDS (TDS on FD) in FD interest for senior citizens. Now TDS will not be deducted on the interest received from bank fixed deposit (FD) like before. Now senior citizens have got a lot of relief due to the increase in the limit.
This provision has been made on FD interest
The government has doubled the TDS exemption for senior citizens in FD. Now no TDS (TDS on FD) will be deducted until the interest is Rs 1 lakh per annum. Earlier this limit was Rs 50,000. If senior citizens now invest in FD with planning, then they can earn interest up to Rs 99,999 annually and no TDS will have to be paid.
Keep these things in mind to get exemption
If you are making FD in the bank, then it is important that the amount of FD and the interest rate of the bank have been chosen correctly. According to the interest rates, senior citizens have to keep in mind that their total interest should not exceed one lakh.
How much money to invest at what interest rate
If you want to avoid TDS on FD, then you have to see that at what interest rate, how much money will generate interest up to Rs 99999. Let’s understand.
- Interest rate: 8%
- Investment amount: Rs 12,13,110
- Annual interest: Rs 99,999
- Interest rate: 8.55%
- Investment amount: Rs 11,32,751
- Annual interest: Rs 99,999
- Interest rate: 9.5%
- Investment amount: Rs 10,15,864
- Annual interest: Rs 99,999
TDS will not be deducted on this FD
If the consumer makes a cumulative FD, then the interest is reinvested in it. In this, TDS will not be deducted in the first year. In the second year, the interest will exceed 1 lakh. The reason for this is that the interest of the first year will also be added to the principal, so TDS will start being deducted from the second year.
On the other hand, if we talk about Quarterly Payroll Out FD (TDS on FD), then the interest comes into the account every three months. In this, the principal amount remains the same. In such a situation, the interest rates will not go to one lakh and neither will TDS be deducted.
When will the rule be implemented
The government has currently presented the budget for the financial year 2025-26. In such a situation, this new financial year is coming into effect from April 2025. This rule will also be applicable from this day.
Tax will have to be paid
Not deducting TDS on interest up to 1 lakh does not mean that this income is income tax free. If your total amount comes under the purview of income tax, then you will have to pay tax. You can save tax on income up to 12 lakh by choosing the new tax regime.
Elderly people can invest here
Different banks have different interest rates for FD for senior citizens. Central Bank of India offers 8% interest rates for a period of 1111 days. Bandhan Bank offers 8.55% interest rates for a period of 1 year. Unity Small Finance Bank offers 9.5% interest rates for a period of 1001 days.
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