Fixed deposit schemes for senior citizens with tax benefits
New FD Rules for 2025: No ITR, No Tax, No TDS on Fixed Deposits up to ₹50 Lakh
Starting from April 1, 2025,
a significant tax exemption rule will benefit Fixed Deposit (FD) holders,
particularly senior citizens. If you invest up to ₹50 lakh in an FD, you
will not be required to file an Income Tax Return (ITR), pay tax,
or have Tax Deducted at Source (TDS) on your earnings, provided certain
conditions are met.
This article explains the new FD tax
exemption rule, the eligibility criteria, and the benefits with practical
examples.
Understanding
the New FD Rule for 2025
For the financial year 2025-26,
no TDS, ITR, or tax will be applicable on FDs up to ₹50
lakh, provided that the total annual interest income remains below ₹4 lakh.
This rule is highly beneficial for senior citizens, but it applies to
everyone under the same conditions.
Who
Qualifies as a Senior Citizen?
A person is considered a senior
citizen if they turn 60 years or older within the financial year.
For example, those who turn 60 in FY 2025-26 will qualify as senior
citizens in the 2026-27 assessment year and can claim the tax benefits.
Examples
of FD Investment and Tax Savings
Example
1: Fixed Deposit in SBI
- Investor:
Aishwarya
- Bank:
State Bank of India (SBI)
- FD Amount:
₹50 lakh
- Interest Rate:
7.50% (for senior citizens)
- Annual Interest Earned: ₹3,85,679
Since the total interest income
is below ₹4 lakh, the investor benefits from:
✅ No ITR filing required
✅ No TDS deduction (by submitting Form 15H)
✅ No tax payment (as income is within the exemption limit)
Example
2: FD in Bandhan Bank
- Investor:
Salman
- Bank:
Bandhan Bank
- FD Amount:
₹45 lakh
- Interest Rate:
8.55%
- Annual Interest Earned: ₹3,99,000
Since his total income is still below
₹4 lakh, he enjoys:
✅ No ITR requirement
✅ No TDS deduction (by submitting Form 15H)
Example
3: High-Interest FD (9.50%)
- Investor:
Vivek
- FD Amount:
₹40-50 lakh
- Interest Rate:
9.50%
- Annual Interest Earned: ₹3,98,675
Again, since his total income
remains under ₹4 lakh, he qualifies for:
✅ No ITR filing
✅ No TDS deduction
✅ No tax liability
Key
Benefits of the New FD Tax Rule
- Senior citizens can save more: No tax on FD interest up to ₹4 lakh.
- No TDS deductions:
By submitting Form 15H, even if interest exceeds ₹1 lakh, banks
will not deduct TDS.
- No ITR requirement:
If total income is within the basic exemption limit, filing an income tax
return is not mandatory.
- Higher returns:
Choosing a higher interest rate can maximize FD earnings while
still avoiding tax deductions.
Important
Considerations Before Investing in FDs
- Verify the bank’s credibility before investing in high-interest FDs.
- Ensure total interest income remains below ₹4 lakh to avoid tax liabilities.
- Submit Form 15H
to prevent TDS deductions.
- Monitor changes in tax rules for future adjustments.
Conclusion
The new FD tax exemption rule for
2025 is a significant relief for investors, particularly senior citizens,
allowing them to earn interest without tax deductions or ITR filing.
With proper planning and strategic investment in high-interest FDs, you can maximize
returns while staying tax-free
DISCLAIMER
Airfinac.com, its author/writer and associates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction