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Finance Minister Nirmala Sitharaman introduced several key tax relief measures for senior citizens in the Union Budget 2025
Income Tax Budget 2025: key tax relief measures for senior citizens in the Union Budget 2025
Senior Citizens tax changes in Budget 2025: Finance Minister Nirmala Sitharaman introduced several key tax relief measures for senior citizens in the Union Budget 2025, including an increased tax deduction limit on interest income and more relaxed withdrawal rules for select savings schemes.
While presenting the Budget in Parliament, Sitharaman also proposed rationalizing Tax Deduction at Source (TDS) by simplifying the number of rates and raising threshold limits for greater clarity and consistency.
On Tax Deduction Limit
The tax deduction limit on interest income for senior citizens has been doubled from Rs 50,000 to Rs 1 lakh. Additionally, the TDS threshold on rent payments has been raised from Rs 2.4 lakh to Rs 6 lakh per year, making compliance easier for many elderly taxpayers.
What Did FM Sitharaman Say On NSS?
Sitharaman also addressed the issue of old National Savings Scheme (NSS) accounts, stating that withdrawals from such accounts will be exempt from taxes if made on or after August 29, 2024, as these accounts no longer pay interest.
NSS-87 was launched in 1987 and discontinued in 1992. A fresh series, NSS-92, was launched in 1992 but was discontinued in 2002. No other NSS schemes have been launched since then. NSS-87 allows one withdrawal in a year, but there is no limit on withdrawals from NSS-92.
One should not confuse NSS with the National Savings Certificate (NSC), which is an entirely different small savings scheme. There is no change in NSC.
The finance ministry issued a circular regarding various irregular, or multiple, accounts in small savings schemes on 12 July, saying that all accounts opened under NSS-87 and NSS-92 would get zero percent rate of interest from 1 October 2024. The gazette notification in this regard was issued on 29 August.
“The balances at the credit of the subscribers of the National Savings Scheme under these rules, on or after the 1st day of October 2024, shall bear no interest,” the ministry added.
On NPS Vatsalya
The finance minister further announced that NPS Vatsalya accounts will receive the same tax treatment as regular National Pension System (NPS) accounts, within overall limits.
NPS Vatsalya is a specific category under the National Pension System (NPS) designed for senior citizens, particularly aimed at providing financial security to elderly individuals. The NPS Vatsalya accounts are meant to ensure that senior citizens, especially those without adequate pension coverage, can accumulate a retirement corpus and receive regular income after retirement.
These changes are expected to encourage savings and reduce the tax burden for senior citizens.
