For taxpayers aged 60+, deduction up to ₹50,000 on interest from all deposits — savings accounts, FDs, and RDs — with banks and post offices. Replaces Section 149 for senior citizens.
Resident individuals aged 60 years or above using the optional tax regime.
Scenario
Retired couple (both aged 68) have FDs totalling ₹50L earning ₹3.5L in annual interest. They file separately.
Calculation
Per taxpayer deduction limit: ₹50,000 Husband: FD interest income: ₹1,75,000 (50% of joint FD) Section 150 deduction: ₹50,000 Taxable interest: ₹1,25,000 Wife (same structure): FD interest income: ₹1,75,000 Section 150 deduction: ₹50,000 Taxable interest: ₹1,25,000 Tax on ₹1,25,000 at 5% slab (after ₹4L nil slab): Nil (income below ₹4L threshold for each)
Result
By splitting FDs between husband and wife and each claiming ₹50,000 deduction, the couple eliminates their interest income tax entirely (both have total income ≤ ₹4L nil slab). Strategic joint deposit allocation is a key retirement tax planning tool.
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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative — verify with a Chartered Accountant before filing.