The Union Budget for 2025 has introduced significant tax reforms for senior citizens, aiming to provide them with much-needed financial relief and encourage savings. Finance Minister Nirmala Sitharaman highlighted these reforms during her Budget speech, with key changes that are expected to reduce the tax burden for seniors and enhance their overall financial security.
One of the major announcements was the increase in the limit for tax deductions on interest for senior citizens. The deduction limit has been raised from Rs 50,000 to Rs 1,00,000, offering considerable relief to those dependent on interest income. This move is expected to encourage greater savings and provide additional financial support to senior citizens, especially those with fixed-income sources such as interest-bearing accounts.
Additionally, Sitharaman addressed the issue of old National Savings Scheme (NSS) accounts, which many senior citizens hold but have stopped earning interest. In a major policy shift, the government will now allow withdrawals from these accounts without imposing any tax. This exemption will apply to withdrawals made from NSS accounts after August 29, 2024, thereby helping seniors access their savings without the added burden of taxes.
Sitharaman also proposed extending similar treatment to National Pension Scheme (NPS) Vatsalya accounts, offering tax relief comparable to that available for regular NPS accounts, within certain limits. This is another step aimed at easing the financial situation of senior citizens who may rely on pension savings.
Meghna Mishra, Senior Partner at Karanjawala & Co., praised the Budget, particularly for middle-class families and senior citizens. The increase in the Tax Collected at Source (TCS) threshold from Rs 7 lakh to Rs 10 lakh and the doubling of the Tax Deducted at Source (TDS) threshold for senior citizens were also cited as positive changes. These reforms are designed to reduce the overall tax liabilities for the elderly, making it easier for them to manage their finances during retirement.
In essence, the Budget 2025 represents a significant step towards reducing the financial strain on senior citizens, offering them greater tax relief and the opportunity to retain more of their savings.
