Investor Query: Can senior citizens claim refund on TDS deducted from FD interest?

I am a 65-year-old retiree. Most of my savings are in bank fixed deposits, the Senior Citizen Savings Scheme (SCSS), and the Post Office Monthly Income Scheme (POMIS). However, the interest I earn is credited to my account only after deducting 10% TDS. My total annual income is below the basic exemption limit for senior citizens. Can I get this TDS refunded? Also, is there a way to avoid such deductions in the future so I don’t have to wait for a refund every year?

This concern is common among senior citizens who largely depend on interest income to meet their household expenses. The good news is that deducted TDS can often be claimed back through an income tax refund, provided the income falls within the exemption limits. In some cases, senior citizens can also prevent TDS deductions entirely by submitting a declaration in advance.

Higher TDS threshold

To provide relief, the government has doubled the TDS threshold for senior citizens effective April 1, 2025. Under the new rules, interest earned from fixed deposits, recurring deposits, and similar instruments will attract TDS only if the aggregate annual interest across all accounts in a single bank exceeds Rs 1 lakh. This means that if a senior citizen’s annual interest income remains below Rs 1 lakh, banks will not deduct any TDS.

When can refunds be claimed?

There are specific scenarios where taxpayers, including senior citizens, can claim refunds:

When tax paid is higher than liability: For example, if the tax liability is Rs 1 lakh but Rs 1.20 lakh has already been paid, the excess Rs 20,000 can be claimed back through the Income Tax Return (ITR).

When income is below the exemption limit: For FY 2024-25, the basic exemption limit for senior citizens is Rs 3 lakh under both tax regimes. In FY 2025-26, it increases to Rs 4 lakh under the new regime, while remaining at Rs 3 lakh under the old regime. If income is below these thresholds, any TDS deducted is fully refundable.

When total income is below Rs 7 lakh under the new regime: For FY 2024-25, income up to Rs 7 lakh is tax-free under the new regime. Pensioners are also entitled to a standard deduction of Rs 75,000, raising the tax-free income to Rs 7.75 lakh. From FY 2025-26, the exemption limit increases further to Rs 12.75 lakh for pensioners and Rs 12 lakh for other senior citizens.

Form 15H

Instead of waiting for refunds every year, senior citizens whose income is below the taxable limit can submit Form 15H to their bank or post office at the beginning of the financial year. This declaration prevents TDS from being deducted on interest income. However, this is only a procedural relief — if the person’s actual income exceeds the exemption limit later, they will still be liable to pay the tax.

Filing and deadlines

For those who do need to claim refunds, filing an ITR is mandatory. The deadline to file returns for FY 2024-25 (AY 2025-26) for senior citizens, whose accounts are not subject to audit, is September 15, 2025. Filing within the due date, with all necessary documents, will ensure a smooth process for claiming refunds of any excess TDS deducted.