New Delhi: Finance Minister Nirmala Sitharaman on Saturday announced to double the limit for tax deduction on interest and increase TDS limit on rent in Union Budget 2025, benefitting senior citizens.
“I propose to rationalize 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,” she said while presenting Union Budget 2025 in Lok Sabha.
The Rs 1 lakh exemption limit will also ease the compliance burden on senior citizens, who earlier had to file an income tax return (ITR) to claim a refund.
The TDS threshold on rent payments has also been raised from Rs 2.40 lakh to Rs 6 lakh per annum.
These changes will ease compliance for many elderly taxpayers who depend on interest income and modest rental earnings for their post-retirement financial stability, while offering more flexibility and savings.
In another change, the threshold for tax collection at source (TCS) on foreign transactions under the liberalised remittance scheme (LRS) has been increased to Rs 10 lakh from the current Rs 7 lakh. This pertains to purchase of foreign tour packages, investments in stocks of foreign companies, gifts to relatives living abroad, and medical treatments, among other transactions.
Sitharaman further stated that senior citizens with very old National Savings Scheme (NSS) accounts—not attracting interest anymore—will be allowed to withdraw their savings without any tax (on or after 29 August 2024).
The NPS Vatsalya accounts will receive the same tax treatment as regular National Pension System (NPS) accounts, subject to overall limits. This will ensure greater flexibility and equity in the treatment of different types of NPS accounts, she added.
