Budget 2026-27 For Senior Citizens: Finance Minister Nirmala Sitharaman has provided significant relief to senior citizens and pensioners in the Budget 2026. The government has increased the TDS deduction limit on interest earned on fixed deposits (FDs) by senior citizens in banks and post offices from ₹50,000 to ₹1 lakh. This decision will be very beneficial for senior citizens who keep their savings in FDs, Senior Citizen Savings Scheme (SCSS), or savings accounts.
Previously, if a senior citizen received total interest from their bank accounts in a year exceeding ₹50,000, the bank would deduct TDS at the rate of 10% on the excess amount. Now, this limit has been increased to ₹1 lakh. This means that if an elderly person’s annual interest income exceeds ₹1 lakh, the bank will not deduct any TDS.
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More cash in hand
The biggest benefit of this change will be that senior citizens will have more cash available each month. Many elderly people rely on bank interest to meet their daily expenses, medicines, and medical treatment.
Suppose a senior citizen earns ₹90,000 in interest annually. Previously, TDS was deducted on ₹40,000 above ₹50,000, reducing their monthly income. Now, there will be no deductions up to ₹1 lakh, so they will receive the full ₹90,000 without any deductions. This will make it easier to manage their monthly budget.
Relief from Paperwork
Many senior citizens have total incomes below the tax threshold, yet due to TDS deductions, they had to file their ITR to get their money back. This process proved tedious and difficult for them.
With the new system, they will no longer need to repeatedly submit Form 15H or wait for refunds. This will save them both time and effort.
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This is not a complete tax exemption
It is important to note that this decision only relates to the TDS limit, not a complete tax waiver. Under Section 80TTB of the Income Tax Act, senior citizens are eligible for an exemption of up to ₹50,000 on interest income, and this limit has not been changed.
If an elderly person’s total income (from interest and other sources) is taxable as per their tax slab, they will have to file their ITR and pay the tax as per the rules. Even if the bank does not deduct TDS, the final tax liability remains with the individual.
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Adarsh P
Adarsh Pal is a content writer at Timesbull Media. He specializes in writing news related to industry updates, the automotive sector, banking, telecommunications, the travel sector, and personal finance. Adarsh has previously worked with several digital media channels. He is skilled at presenting news accurately and disseminating information based on...
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