If you earn interest through fixed deposits or savings accounts, here’s a reason to smile. Bank deposits just became a bigger financial asset in 2025. Thanks to relaxed TDS limits, investors can now enjoy greater control over their earnings and fewer surprises at tax time. Whether you’re saving for retirement or building an emergency fund, leveraging these deposits ensures stable growth, better liquidity and improved post-tax returns with minimal effort.
Why This Change Matters
The new TDS rules aim to simplify tax compliance and boost cash flow for both individuals and professionals. The Union Budget 2025 announced revised TDS thresholds, where senior citizens are exempt up to ₹1 lakh interest income, and regular depositors up to ₹50,000. This enables retirees and pensioners to benefit from higher interest income, while regular investors enjoy fewer deductions on capital gains. Insurance agents, brokers and landlords also see improved income visibility with reduced tax withholding.
By easing upfront deductions, the government is encouraging better financial planning across sectors, minimizing refund delays and offering smoother income access for a wide range of stakeholders.
Bank Smarter with the New TDS Rules
With the new TDS rules in place, bank deposits have become smarter financial tools. Higher TDS thresholds mean more interest in your pocket and fewer deductions. Whether you're a retiree or a regular investor, leveraging bank deposits can now offer tax efficiency, making them a must-have in your wealth-building strategy.
Let’s look at five smart ways to utilize your bank deposits:
Distribute your fixed deposits across banks to stay under the ₹1 lakh interest threshold. This reduces or eliminates TDS deductions.
- Golden Years, Better Returns
Senior citizens can now enjoy higher FD rates and tax efficiency. Combine both benefits for smarter, safer savings.
If your income is below the taxable limit, submitting Form 15H prevents TDS from being deducted - no refund hassle later!
- Keep an Eye on Your Interest
Track interest earnings from all bank accounts. It’s not per bank - crossing ₹1 lakh in total triggers TDS.
- Consult Before You Commit
TDS rules may be simpler, but a quick chat with an expert or a financial advisor ensures you’re maximising post-tax returns on deposits.
Bank deposits are now more tax-efficient than ever, thanks to the updated TDS thresholds. South Indian Bank offers deposit plans that make the most of these tax-smart benefits - ensuring your money works harder for you, while offering smart savings strategies that align with your financial goals.
Disclaimer: The article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of The South Indian Bank Ltd. or its employees. The South Indian Bank Ltd and/or the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/non-financial decisions based on the contents and information’s in the blog article. Please consult your financial advisor or the respective field expert before making any decisions.