Union Budget 2025 | Senior citizens get bitter deal with minimum sops

Though Finance Minister Nirmala Sitharaman on Saturday announced a few tax relief measures for senior citizens and super senior citizens in the Union Budget 2025. But the proposed measures, that include a higher tax deduction limit on interest income and relaxed withdrawal rules for select savings schemes, was a drop in the ocean for pensioners battling inflation and who are, for the most part, dependent on pension and interest earnings from savings.

Sitharaman proposed to rationalize tax deduction at source (TDS) and increased the threshold for tax deduction at source for better clarity and uniformity, which will help senior citizens filing taxes.

In the FY26 Budget, the limit for TDS deduction on interest for senior citizens has been doubled to Rs 1 lakh from the present Rs 50,000.

Similarly, the annual limit of Rs 2.40 lakh for TDS on rent is being increased to Rs 6 lakh. This will reduce the number of transactions liable to TDS, easing compliance for many elderly taxpayers.

"A number of senior and very senior citizens have very old National Savings Scheme accounts. As interest is no longer payable on such accounts, I propose to exempt withdrawals made from NSS by individuals on or after August 29, 2024," Sitharaman said.

Super senior citizens (aged 80 and above) will continue to enjoy the exemption benefit of ₹5 lakh in a financial year, but only under the old regime. However senior citizens will benefit under the new tax regime which has raised the basic exemption to Rs 4 lakh. Earlier, the basic exemption limit for senior citizens was ₹3 lakh per annum under both the old and new tax regimes.

The finance minister announced that NPS Vatsalya accounts will receive the same tax treatment as regular National Pension System (NPS) accounts, subject to overall limits.

In addition, the Atal Vayo Abhyuday Yojana (AVYAY), which provides welfare support to senior citizens, has been allocated Rs 289.69 crore.

The government is also set to introduce a new Income Tax bill next week in Parliament to take forward "trust first, scrutinise later" concept. The bill is expected to simplify the current Income Tax (I-T) law and make it easier to comprehend for tax payers, including senior citizens.

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Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.