Senior Citizen FD Rate: No TDS on Interest Up to Rs1 Lakh – Know the Investment Amount

Good news for senior citizens investing in Fixed Deposits (FDs)! The government has increased the TDS exemption limit on bank FD interest from ₹50,000 to ₹1 lakh per year in Budget 2025. This means senior citizens can now earn up to ₹99,999 in interest annually without TDS deductions, provided they invest strategically.

Plan Your FD Investment to Avoid TDS

To maximize tax benefits, it’s essential to invest the right amount based on the prevailing FD interest rates. Here’s how much you need to invest to stay within the ₹1 lakh limit:

Bank/Institution	Interest Rate	Investment Amount for ₹99,999 Annual Interest
Central Bank of India	8.00%	₹12,13,110
Bandhan Bank	8.55%	₹11,32,751
Unity Small Finance Bank	9.50%	₹10,15,864

Types of FDs That Help Avoid TDS

• Cumulative FD: No TDS in the first year, but in subsequent years, the accumulated interest is added to the principal, potentially exceeding ₹1 lakh.
• Quarterly Payout FD: Ensures regular interest payouts, keeping the total annual interest below the ₹1 lakh limit, thereby avoiding TDS deductions.

Implementation Timeline

The new TDS exemption limit will be applicable from April 2025, and all banks will update their systems accordingly.

Key Points to Remember

✅ No TDS deduction does not mean tax-free income – If your total taxable income exceeds the tax-free limit, you may still owe income tax.
✅ Under the new tax regime, if your income is below ₹12 lakh, you may not need to pay any tax on FD interest.
✅ Monitor interest income using AIS (Annual Information Statement) or Form 26AS on the income tax portal.

Best FD Options for Senior Citizens

• Central Bank of India – 8.00% interest (1111 days)
• Bandhan Bank – 8.55% interest (1 year)
• Unity Small Finance Bank – 9.50% interest (1001 days)

By carefully choosing the right FD and tenure, senior citizens can maximize returns while avoiding TDS deductions. Stay informed and plan your investments wisely!