From today, the elderly will be able to take advantage of the increased limit of TDS deduction. Meaning, now schemes like FD and SCSS have become very beneficial for the elderly. If you also want to invest in Fixed Deposit, then it would be better to get it done in the name of the elderly of the house. This will give you a chance to earn double profit.

With the start of the new financial year (FY2025-26) on April 1, all the announcements that Finance Minister Nirmala Sitharaman made while presenting the budget on February 1, 2025 have come into effect from today. In this budget, many announcements were made keeping in mind every section from the middle class to the elderly. One of these announcements was also about TDS exemption on interest income to the elderly. The Finance Minister had talked about doubling the limit of earning from interest.

From today, the elderly will be able to take advantage of the increased limit of TDS deduction. This means that now schemes like Fixed Deposit and Senior Citizen Savings Scheme (SCSS) have become very beneficial for the elderly. If you also want to invest in Fixed Deposit, then it would be better to get it done in the name of the elderly in your house. This will give you a chance to earn double profit. Understand how.

TDS limit increased to Rs 1,00,000

From the new financial year, the limit of TDS deduction for the elderly has been doubled. Now TDS will not be deducted on earnings up to Rs 1,00,000. This means that if senior citizens earn up to Rs 1,00,000 as interest from schemes like FD, SCSS, then TDS will not be deducted on it. Till now this limit was Rs 50,000.

Banks already give more interest

Let us tell you that most of the elderly consider FD as a reliable means of investment and do not want to take any kind of risk on their deposits after retirement. Therefore, they invest in fixed deposits to keep their money safe. Understanding this thinking of senior citizens, banks include them in the list of priority customers and encourage them to invest more and more money in FD by offering higher interest on FD than the general people. Usually, banks give 50 basis points i.e. 0.50% more interest to senior citizens on FDs of different tenures as compared to general fixed deposits. Apart from this, some banks give an additional interest of 0.25% to 'super senior citizens' aged 80 years or more.

By making FD in the name of the elderly, you will get double benefit

The limit of TDS deduction for the elderly is certainly double, but for the common people this limit is still Rs 40,000. In such a situation, if you make FD in the name of an elderly person in your house instead of yourself in the new financial year, then along with taking advantage of interest, you will also be able to take advantage of the exemption on interest income.

Understand with an example

Suppose you invest Rs 3,00,000 in a 3-year FD in your name and interest is given at the rate of 7 percent on it, then you will earn Rs 69,432 from interest. Since the limit of TDS deduction for common people is 40,000, TDS will be deducted on the income of Rs 69,432. On the other hand, if you make the same amount in the name of an elderly person in your house, then you will get 0.50% more interest and there will be no TDS deduction. In this case, you will earn interest of Rs 74,915 at the rate of 7.5% on Rs 3,00,000, but TDS will not be deducted on it.