The Union Budget 2025 proposes raising the TDS threshold, offering additional financial relief to small taxpayers and senior citizens, who depend on fixed deposit plans for assured profits

Budget 2025 hikes TDS limit for senior citizens: Here is a list of banks offering highest rates on 1-year FDs for senior citizens Here are banks offering the best rates for senior citizens on 1-year FDs

In order to streamline compliance and reduce financial burdens on taxpayers, especially small taxpayers and senior citizens, Union Finance Minister Nirmala Sitharaman, in the Union Budget 2025, proposed significant revisions to the tax deduction at source (TDS) framework, increasing threshold limits in various categories.

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The Budget 2025 aims to provide greater financial relief to the middle class and senior citizens by increasing the tax exemption threshold. For senior citizens, the limit for tax deduction on interest income from fixed deposits (FDs) and recurring deposits (RDs) has been raised from Rs 50,000 to Rs 1 lakh per financial year.

Also read: IDFC FIRST Bank revises interest rate, terms and features on its credit cards from this date: Check details

For senior citizens, tax will be deducted only if interest income from savings accounts, FDs, RDs, etc., crosses the limit of Rs 1 lakh in a financial year. Currently, the threshold for the general public is Rs 40,000, and for senior citizens, it is Rs 50,000; changes will be effective from April 1, 2025.

When is TDS applicable

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The tax deduction at source (TDS) rule applies when the interest generated on FDs exceeds a certain threshold within a financial year.

Also read: Latest Kotak Mahindra Bank changes and charges for account holders—From ATM transaction limits to cash transaction charges

Banks offering highest rates on one-year FD for senior citizens
Among private sector banks, Bandhan Bank currently offers the highest interest rate of 8.55% on one-year FD for senior citizens, followed by IndusInd Bank and YES Bank at 8.25%, and RBL Bank at 8%. DBS Bank and Federal Bank offer an interest rate of 7.5%, while DCB Bank and Kotak Mahindra Bank offer 7.6%. Other private banks, such as Axis Bank, ICICI Bank, and South Indian Bank, offer rates around 7.2%, while HDFC Bank offers an FD interest rate of 7.1% to its senior citizen customers.

In the public sector banks category, most banks, including Bank of India, Punjab National Bank, State Bank of India, and Union Bank of India, offer an interest rate of 7.3% for one-year FD.
Bank of Baroda, Canara Bank, and Central Bank of India offer a similar FD interest rate of 7.35% for senior citizens on a one-year FD.

However, among public sector lenders, Indian Bank provides the lowest FD interest rate of 6.6%, whereas Indian Overseas Bank offers the highest FD interest rate of 7.6% for senior citizens.

This comparison highlights that private banks generally provide higher interest rates than public sector banks, making them more attractive for depositors seeking better returns.

Here is a list of banks offering the highest rates on one-year FDs for senior citizens in %:

PRIVATE SECTOR BANKS
Axis Bank	7.2
Bandhan Bank	8.55
DBS Bank	7.5
DCB Bank	7.6
Federal Bank	7.5
HDFC Bank	7.1
ICICI Bank	7.2
IDFC First Bank	7
IndusInd Bank	8.25
Kotak Mahindra Bank	7.6
RBL Bank	8
South Indian Bank	7.2
YES Bank	8.25
PUBLIC SECTOR BANKS
Bank of Baroda	7.35
Bank of India	7.3
Canara Bank	7.35
Central Bank of India	7.35
Indian Bank	6.6
Indian Overseas Bank	7.6
Punjab National Bank	7.3
State Bank of India	7.3
Union Bank of India	7.3

Source: Paisabazaar data as on February 5, 2025.

This story originally appeared on: India Times - Author:Faqs of Insurances