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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Budget with ET

Tax calculator
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 Bank7.2Bandhan Bank8.55DBS Bank7.5DCB Bank7.6Federal Bank7.5HDFC Bank7.1ICICI Bank7.2IDFC First Bank7IndusInd Bank8.25Kotak Mahindra Bank7.6RBL Bank8South Indian Bank7.2YES Bank8.25PUBLIC SECTOR BANKSBank of Baroda7.35Bank of India7.3Canara Bank7.35Central Bank of India7.35Indian Bank6.6Indian Overseas Bank7.6Punjab National Bank7.3State Bank of India7.3Union Bank of India7.3
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This story originally appeared on: India Times - Author:Faqs of Insurances