If you invest in fixed deposits (FD), then this budget has brought great relief for you. In Budget 2025, Finance Minister Nirmala Sitharaman has announced to increase the tax exemption limit on interest income of fixed deposits. Now the TDS limit for ordinary citizens has been increased from Rs 40,000 to Rs 50,000. That is, now more money will be saved in your savings and tax will be reduced.
How will the new TDS rules work?
Suppose the Gita is 35 years old. She earns an interest of Rs 50,000 on her FD in a year. Under the new rule:
TDS limit: Rs 50,000
TDS deduction: 0% at ₹ 50,000 i.e. 0
If the interest income was more than Rs 50,000, then there would have been a TDS deducted.
However, Geeta’s ₹ 75,000 interest income will be added to its total income. If her total income is less than ₹ 12.75 lakhs, she will not have to pay tax and she can take the cut TDS as returns while filing returns.
Senior citizens get big relief
This budget is even more special for senior citizens (60 years and older). Now the limit of TDS on their interest income has been increased from Rs 50,000 to Rs 1 lakh. That is, now they can avoid tax deduction on their more savings.
How does TDS work?
TDS is deducted only when exceeding the limit.
10% TDS is deducted when PAN number is available.
This rate becomes 20% when there is no PAN number.
In Joint FD, TDS is cut in the name of the main account holder.
Adil Shetty, CEO of Bankbazaar.com, says, “Increased tax exemption will apply to the interest on fixed deposits and the interest received on Sovereign Bonds, so that senior citizens will be able to keep their more savings with them. This will give them better returns, increase financial security, tax process will be easier and more money will come in their hands. ”
Take advantage of good interest along with savings
If you are thinking of investing in FD, then know in which bank you will get the highest interest: