Finance Minister Nirmala Sitharaman has made a big announcement for Senior Citizens on 1 February. He has increased the limit for TDS from Rs 50,000 to Rs 1 lakh on interest income. This will greatly benefit retired people. Such people depend to a large extent on interest income from bank deposits for spending. Let’s know how she will benefit from Nirmala Sitharaman’s announcement of February 1.
Till now, senior citizens did not get the interest of up to Rs 50,000 from the bank deposit. He used to get this facility under section 80TTB of the Income Tax Act. Finance Minister Nirmala Sitharaman has announced to increase this limit of Rs 50,000 to Rs 1 lakh on 1 February. This means that the interest from the bank deposit to the senior citizens will not come under the purview of up to one lakh rupees in a financial year.
After the Finance Minister’s announcement on 1 February, now if a senior citizen gets an interest of up to one lakh rupees in a financial year on its deposit in a bank or post office, then the bank or post office will not deduct TDS on it. Earlier, the bank or post office used to deduct 10 percent tax on interest in more than Rs 50,000. In the case of senior citizens, banks cut 20 percent of TDS, which do not have PAN.
Due to 10 % tax being deducted on interest income, senior citizens reduce the income from interest. Since retired people depend on the interest for their expenses. Therefore, due to TDS, they have to face a lot of problems. After the Finance Minister’s announcement on 1 February in the union budget, income from interest will not come under the purview of up to Rs 1 lakh. This means that every month interest income up to Rs 8 will be out of TDS for them.