Bank FD: If you are 60 years or above and want to earn money in a safe way by staying away from the fluctuations of the stock market, then bank fixed deposits (FDs) are a great option for you. The good news is that some banks are offering bumper interest of up to 7.85% on three-year FDs to senior citizens till July 2025.
This scheme applies to deposits up to ₹3 crore, and at such a high interest rate, a good amount can be earned in three years. Apart from this, if your total annual income does not fall under the tax bracket, then you can also avoid TDS (tax deduction at source) on FDs by filling Form 15H. Let’s understand all this information in detail so that you can get the maximum benefit on your savings.
Where is the highest interest available on senior citizen FDs
The banks given below are offering great returns on three-year senior citizen FDs. These rates have been specially designed keeping in mind the financial security and income of senior citizens.
IndusInd Bank:- 7.5%
RBL Bank:- 7.6%
Bandhan Bank:- 7.75%
SBM Bank India:- 7.8%
Yes Bank:- 7.85%
Among these banks, Yes Bank is offering the highest interest rate of 7.85%, which is a golden opportunity for senior citizens. This rate is considered to be the most competitive in the market, which is a great option for those seeking safe and stable income.
When and why is TDS deducted on FD
If the annual interest from your fixed deposit (FD) is more than ₹ 1 lakh, then the bank is bound to deduct TDS (Tax Deducted at Source) as per the rules, whether your total income falls under the tax bracket or not.
What does TDS mean
This TDS is not an additional tax, but it can be adjusted while filing your Income Tax Return (ITR) or can be refunded.
For example:-
If a senior citizen has a total annual income of ₹11 lakh and he adopts the new tax regime, then income up to ₹12 lakh in the financial year 2025-26 is fully tax exempt under Section 87A. Despite this, the bank deducts TDS because it does not know your total tax liability; it deducts tax automatically by looking at only the amount of interest. In such a situation, if your total income is less than the tax exemption limit, you can avoid TDS deduction by submitting Form 15H.
How to save TDS with Form 15H
If you are 60 years or older and your total taxable income is less than the exemption limit set by the government, you can avoid TDS deduction on fixed deposits by submitting Form 15H to the bank.
In the new tax system:- There is no tax on income up to ₹12 lakh due to the exemption under Section 87A.
In the old tax system:- This limit is up to ₹5 lakh. (A basic exemption of ₹5 lakh is also available for those above 80 years of age.)
In such a situation, if your total income is within these limits, filling out Form 15H and giving it to the bank will prevent the bank from deducting your TDS. This ensures that your entire interest income remains with you and you do not have to wait to file ITR for a refund. This is an important financial facility for senior citizens.