For the financial year 2025-26, the Government of India has made several significant changes in tax, especially for senior citizens. This year’s budget has improved the rules related to tax slab, fixed deposit (FD), and Tax deduction at source (TDS). The purpose of these changes is to provide economic relief to senior citizens and promote their savings.
In this article, we will discuss what are the ways to save tax in 2025-26 and how the new rules related to FD and TDS can prove to be helpful for senior citizens.
Tax slab and exemption in 2025-26
Finance Minister Nirmala Sitharaman has made changes in tax slabs in the budget of 2025-26. Under the new tax system, no tax will be paid on income up to Rs 12 lakh. Only those with salary will get this discount.
Details of Tax Slab:
| Income limit (Rs) | Tax rate (%) |
| 0 – 12 million | 0% |
| 12 – 1.1 million | 15% |
| 15 – 2 million | 20% |
| More than 25 lakhs | 30% |
This new system will provide relief to middle class families, while people taking advantage of the old system will get limited exemption.
New rules related to FD and TDS for senior citizens
TDS limit increased
The TDS limit has been increased from ₹ 50,000 to ₹ 1,00,000 on interest earned on fixed deposits for senior citizens. This means that if the annual interest income of a senior citizen is less than ₹ 1,00,000, then no TDS will be deducted on it.
Its benefits:
- Better cash flow: Senior citizens will get relief from deduction on interest amount.
- Return filing facility: Those whose income is limited to FD interest only, will not need to file returns to get tax refunds.
Attractive interest on fixed deposits
Banks and post offices have made interest rates more competitive for senior citizens on FD schemes. This will give better returns on their savings.
Other ways to save tax
Use of Section 80C
Under Section 80C, you can claim a cut of up to ₹ 1.5 lakh. This includes the following investment:
- PPF
- NSC (NSC)
- LIC Premium
- Tuition fees
Section 80D: Medical Insurance Premium
Senior citizens can claim a cut of up to ₹ 50,000 on their medical insurance premium.
Section 87A: Ribet
If your total income is less than ₹ 12 lakhs, then you can get a discount of up to ₹ 12,500 under Section 87A.
Tips to save tax
- Compare the new and old system: Select the correct system based on your income and investment plans.
- Take advantage of FD and other savings schemes: Senior citizens can invest in FD or post office schemes.
- House Property Income: If you have two properties, now you can get tax exemption on both property.
- Discount on donation: Claim the discount on the amount donated.
Important changes for senior citizens
| Rule | First | Now (2025-26) |
| TDS limit (fd interest) | ₹ 50,000 | ₹ 1,00,000 |
| Section 80D deduction | ₹ 25,000 | ₹ 50,000 |
| Rebate on two properties | A property | Two properties |
| Minimum taxable income limit | 500,000 | 1.1 million |
New system vs old system
The new system is beneficial for those who invest less and want simplicity. At the same time, the old system can be better for those who invest more and take advantage of cuts in different sections.
conclusion
In FY 2025-26, the government has taken several positive steps to make senior citizens financially strong. Increasing the TDS limit on FD and implementing new tax slabs will improve their cash flow. Also, they can reduce their tax liability by using the provisions like Section 80C and Section 80D properly.
Disclaimer:
This article has been written only to provide information. Please seek specialist advice before taking your financial decision.
