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 interest income.

From today, the elderly will be able to take advantage of the increased limit of TDS deduction. This means now schemes like Fixed Deposits 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 the profit. Understand how.

TDS limit increased to Rs 1,00,000

From the new financial year, the limit of TDS deduction for senior citizens has doubled. Now TDS will not be deducted on income 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, and SCSS, then TDS will not be deducted from it. Till now this limit was Rs 50,000.

Banks already give higher interest.

Let us tell you that most senior citizens consider FD as a reliable means of investment and do not want to take any kind of risk on their savings after retirement. Therefore, to keep their money safe, they invest in fixed deposits. 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 FDs by offering higher interest on FDs 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 generally fixed deposits. Apart from this, some banks give an additional interest of 0.25% to 'super senior citizens' aged 80 years or more.

You will get double benefit by making FD in the name of the elderly.

The limit of TDS deduction for the elderly is certainly double, but for the general people this limit is still only 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 the interest, you will also be able to take advantage of the exemption on the income from interest.

Understand with an example.