When it comes to senior citizens and investment, fixed deposits (FDs) still rank as one of the top choices. Fixed deposits for senior citizens offer special interest rates over and above the interest rates offered to general investors. Senior citizens are offered a wide range of benefits under FD schemes, besides the additional 0.50 per cent to 0.75 per cent interest rate that most banks offer.
Besides, the senior citizen FD can also help save tax if it is a 5-year tax saver fixed deposit, which helps get tax deductions under section 80C of the IT Act. This would be along with the additional interest.
Banks and non-bank financing companies in India offer an interest rate ranging from 2.55 per cent to 9.26 per cent a year on different tenures, like 7 days to 10 years. While nationalised banks offer a return of up to 7.5 per cent on fixed deposits, Small Finance Banks (SFBs) offer a return of up to 9 per cent on fixed deposits.
Let’s look at the 4 private banks offering the best rates to senior citizens.
1. Bandhan Bank
Best slab: 8 per cent
Bandhan Bank offers term deposits or fixed deposits (FDs) to senior citizens with interest rates in the range of 3.00 per cent to 8 per cent for domestic investors. The rate for senior citizens is 0.75 per cent higher than the general investors. The best rate is 8 per cent for schemes of 600 days.
| Tenure | Senior Citizens (interest rate p.a.) |
| 7 days to 14 days | 3.75% |
| 15 days to 30 days | 3.75% |
| 31 days to less than 2 months | 4.25% |
| 2 months to less than 3 months | 5.25% |
| 3 months to less than 6 months | 5.25% |
| 6 months to less than 1 year | 5.25% |
| 1 year to 599 days | 7.50% |
| 600 days (1 year, 7 months, 22 days) | 8.00% |
| 601 days to less than 2 years | 7.50% |
| 2 years to less than 5 years | 7.50% |
| 5 years to up to 10 years | 6.35% |
2. DCB Bank
Best rate: 8.35%
After revising its interest rates on Thursday, private sector bank DCB Bank is offering the maximum interest rate of 8.35 per cent for senior citizens for the schemes maturing in more than 700 days to 36 months.
| Tenure | Senior Citizens (interest rate p.a.) |
| 7 days to 14 days | 4.25% |
| 15 days to 45 days | 4.25% |
| 46 days to 90 days | 4.50% |
| 91 days to less than 6 months | 5.25% |
| 6 months to less than 12 months | 6.75% |
| 12 months | 7.75% |
| More than 12 months to less than 15 months | 7.75% |
| 15 months to less than 18 months | 7.75% |
| 18 months to less than 700 days | 8.00% |
| 700 days | 8.00% |
| More than 700 days to less than 36 months | 8.35% |
| 36 months | 8.35% |
| More than 36 months to 60 months | 8.10% |
| More than 60 months to 120 months | 8.10% |
Read More: 4 Banks That Provide The Best FD Rates For Senior Citizens Over 80
3. Yes Bank
Best rate: 8% (Special FD)
Under the regular FD schemes, Yes Bank is offering 7.5 per cent interest on senior citizen FDs. The interest rate ranges from 3.75 per cent to 7.50 per cent on FD schemes maturing in 7 days to 10 years.
But if senior citizens opt for the special FD scheme for 30 months, then they can get an interest rate of 8 per cent. The rates were revised on December 9 after the RBI raised the repo rate to 6.25 per cent.
| Tenure | Senior Citizens |
| 7 days to 14 days | 3.75% |
| 15 days to 45 days | 4.20% |
| 46 days to 90 days | 4.60% |
| 91 days to 180 days | 5.25% |
| 181 days to 271 days | 6.00% |
| 272 days to less than 1 year | 6.25% |
| 1 year to less than 20 months | 7.50% |
| 22 months 1 day to less than 30 months | 7.50% |
| 30 months 1 day to less than 36 months | 7.50% |
| 30 months | 8.00% |
| 3 years to 10 years | 7.50% |
4. RBL Bank
Best rate: 8.05 per cent
Mumbai-based RBL Bank offers an additional interest rate of 0.75 per cent a year over and above the normal FD rates. The best rate offered by the bank is 8.05 per cent per annum.
| Tenure | Senior Citizens |
| 7 to 14 days | 3.75% |
| 15 to 45 days | 4.25% |
| 46 to 90 days | 4.50% |
| 91 to 180 days | 5.00% |
| 181 to 240 days | 5.50% |
| 241 to 364 days | 6.35% |
| 12 months to less than 15 months | 7.50% |
| 15 months | 8.05% |
| 15 months 1 day to less than 725 days | 8.05% |
| 725 days | 8.05% |
| 726 days to less than 24 months | 7.50% |
| 24 months to less than 36 months | 7.50% |
| 36 months to 60 months 1 day | 7.05% |
| 60 months 2 days to 240 months | 6.75% |
Taxes on Senior Citizen FDs
It is to be noted that the interest earned on senior citizen fixed deposits may be liable for income tax based on the applicable laws. These taxes are deducted at the source. Senior citizens can avoid taxes if they can submit forms 15G or 15H to the banks.
If the term deposit is an NRE deposit then it may not be liable for taxes.
Use of Form 12BBA
In addition to this, senior citizens can avoid paying income tax on their fixed deposit scheme, as per the government of India’s rules. From this year, senior investors above the age of 75 can get an exemption from filing income tax if they submit form 12BBA with the banks for their FD schemes. Therefore, senior citizens who earn from interest from fixed deposits can now avoid paying income tax.
When you submit Form 12BBA, the senior citizen taxpayers do not have to go through the hassle of getting a refund on tax deducted at source (TDS) on interest from fixed deposits. The IT laws state that 10 per cent TDS is deducted on interest income over Rs.50,000 earned by a senior citizen who is 60 years and over.
