Feb 05, 2025 01:40 PM IST
Finance minister Nirmala Sitharaman introduced several tax reforms in the Budget 2025 intended to benefit middle-class taxpayers, including senior citizens.
Finance minister Nirmala Sitharaman introduced several tax reforms in the Budget 2025 intended to benefit middle-class taxpayers, including senior citizens.
One such example is the new income tax exemption limit to ₹12 lakh in the new tax regime.
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Another example is the simplification of Tax Deducted at Source (TDS) compliance.
For senior citizens investing in fixed deposits, the threshold of TDS on interest income exceeding ₹50,000 was raised to ₹1 lakh starting from the financial year 2025-26.
Also the annual TDS limit on rent was increased from ₹2.40 lakh to ₹6 lakh per year. Previously, tenants had to deduct TDS at a rate of 10% before paying rent.
This aims to decrease the number of transactions subject to TDS, offering advantages to taxpayers who receive modest rental incomes.
For senior citizens, the TDS threshold was doubled to ₹1 lakh from ₹50,000.
This means that banks will only deduct TDS from a senior citizen’s interest income on fixed deposits if it surpasses ₹1 lakh in a financial year.
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As a result, this lowers tax responsibility for senior citizens and also leaves them with higher disposable income.
Many senior citizens may even be exempted from filing income tax returns (ITRs) as a result, reducing their compliance burden.
“The increased threshold for TDS deduction in case of interest other than interest on securities and the allowance of tax-free withdrawals from NSS accounts will provide significant financial relief to senior citizens,” said Vimal Nadar, Head of Research at Colliers India. “This will increase liquidity in the hands of senior citizen and provide them with sufficient flexibility to invest in purpose-built senior housing.”
Tax slabs for senior citizens
The new tax rates and slabs will come into effect from financial year 2025-26 (Assessment year 2026-27). Budget 2025 also did not make any changes to the old tax regime.
| Income Tax Slab | Tax Rates for Senior citizens aged above 60 Years & Less than 80 Years |
|---|---|
| Up to ₹ 3 lakh | No tax |
| ₹3 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| More than ₹10 lakh | 30% |
| Income Tax Slab | Tax Rates for Super Senior Citizens (Aged 80 Years And Above) |
|---|---|
| Up to ₹5 lakh | No tax |
| ₹5 lakh – ₹10 lakh | 20% |
| More than ₹10 lakh | 30% |
| Income Tax Slabs | Tax Rates |
|---|---|
| Up to Rs. 4 lakh | NIL |
| Rs. 4 lakh – Rs. 8 lakh | 5% |
| Rs. 8 lakh – ₹lakh | 10% |
| Rs. 12 lakh – Rs. 16 lakh | 15% |
| Rs. 16 lakh – Rs. 20 lakh | 20% |
| Rs. 20 lakh – Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
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