Union Budget 2025: Tax deduction on interest for senior citizens doubled from Rs 50,000 to Rs 1 lakh

Finance Minister Nirmala Sitharaman on Saturday said tax deductions at source (TDS) will be rationalised for senior citizens and doubled from Rs 50,000 to Rs 1 lakh.

“I propose to rationalise tax deductions at source (TDS) by reducing the number of rates and thresholds about which TDS is deductible. Further, threshold amounts for tax deduction will be increased for better clarity and uniformity. The limit for tax deduction on interest for senior citizens is being doubled from the present Rs 50,000 to Rs 1,00,000,” said Sitharaman as she presented Union Budget 2025.

Sitharaman also said that the annual limit on rent has been raised to 6 lakh for TDS for senior citizens during her Budget 2025 speech in Parliament.

She explained that this increase will reduce the number of transactions subject to TDS, thereby benefiting small taxpayers receiving smaller payments.

“This will reduce, this will reduce the number of transactions liable to TDS, thus benefiting small tax payers receiving small payments”, she said.

She further added, “The threshold to collect tax at source (TCS) on remittances under RBI’s Liberalized Remittance Scheme (LRS) is proposed to be increased from Rs 7 lakh to Rs 10 lakh. I also propose to remove TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution.Both TDS and TCS are being applied on any transaction relating to sale of goods. To prevent such compliance difficulties, I propose to omit the TCS. I also propose that the provisions of the higher TDS deduction will now apply only in non-PAN cases.”

Sitharaman on Saturday made history as she presented a record eighth consecutive budget, which comes in the backdrop of slowdown in economy and demand for tax cuts for middle class.

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This will take Sitharaman closer to the record of 10 budgets that were presented by former Prime Minister Morarji Desai over different time periods.

Desai has presented a total of 6 budgets during his tenure as finance minister from 1959 to 1964, and 4 budgets between 1967 and 1969.

With inputs from agencies