Income Tax On FD : During the Union Budget 2025, significant relief was announced on income tax and TDS, providing major benefits to taxpayers. Now, with Budget 2026 approaching, expectations are rising for further concessions that could offer substantial relief to everyone—from salaried individuals to senior citizens.
There is strong anticipation that the government may further expand the scope of TDS exemptions on rental income and Fixed Deposit (FD) interest. Additionally, changes in the Old Tax Regime are also being widely demanded.
Income Tax : Higher TDS Limit on Interest Income
One major demand is to increase the TDS threshold on interest income for senior citizens. From the financial year 2025–26, banks will deduct TDS on Fixed Deposit interest only if the annual interest income exceeds ₹1 lakh, up from the earlier limit of ₹50,000.
However, since retired individuals rely heavily on interest income, there is growing demand to raise this limit even further to provide them greater financial relief.
More Relief Expected on Rental Income
Relief has already been provided in the case of rental income, but there are expectations for additional concessions. The annual TDS threshold on rent has been increased from ₹2.40 lakh to ₹6 lakh, offering significant relief to people earning income from rent.
Despite this, taxpayers are now demanding that the limit be raised even further in the upcoming budget.
Possible Changes in the Old Tax Regime
As Union Budget 2026 draws closer, senior citizens are once again hopeful for higher tax exemptions and possible revisions in interest rates on key savings schemes.
Under the Old Tax Regime, the basic exemption limit for senior citizens is currently ₹3 lakh per year, while super senior citizens (aged 80 years and above) enjoy a higher exemption limit of ₹5 lakh.
In comparison, the New Tax Regime offers a basic exemption limit of ₹4 lakh. There is growing expectation that the government may introduce favorable changes to the Old Tax Regime in the upcoming budget.
Additional Tax Relief for Senior Citizens
In Union Budget 2024, Finance Minister Nirmala Sitharaman simplified tax compliance for senior citizens aged 75 years and above. Under the revised rules, individuals earning income only from pension and interest are exempt from filing income tax returns, provided certain conditions are met.
Financial planners had earlier recommended lowering this age limit to 70 years in Budget 2025, so that a larger group of retired individuals could benefit. As Budget 2026 approaches, this proposal is gaining renewed support.
Possible Tax Relief on Senior Citizen Savings Schemes
There is also speculation that the government may increase tax exemptions on interest earned from Senior Citizens’ Savings Scheme (SCSS) and post office savings accounts.
Retired individuals who depend heavily on these schemes for their daily expenses could receive meaningful financial support if additional tax relief is announced, strengthening income security during their post-retirement years.