Despite interest rates witnessing a wave of reductions there are still many banks who are offering a high rate of interest of up to 8.25% on Fixed Deposits (FDs). These rates are offered on FDs worth less than Rs 3 crore and for one year tenure for senior citizens. This short-term tenure along with high interest rate makes a great combo for senior citizens who have idle money and want to earn some interest off it. Moreover, from April 1, 2025 senior citizens can enjoy a higher threshold for TDS deduction on FD interest.
Senior citizen Bank FD interest rate for one year tenure
Senior citizen FD rate up to 8.25%
Bandhan Bank is offering up to 8.25%% interest rate on FDs for one year tenure for senior citizens.
Senior citizen FD rate up to 8%
IndusInd Bank is offering up to 8% interest rate on FDs for one year tenure for senior citizens.
RBL Bank is offering up to 8% interest rate on FDs for one year tenure for senior citizens.
Source: paisabazaar.com as on May 7, 2025
Senior citizen FD rate up to 7.75%
Tamilnad Mercantile Bank is offering up to 7.75% interest rate on FDs for one year tenure for senior citizens.
Higher TDS threshold for senior citizen investing in FDs
While presenting the Budget 2025, tThe finance minister has stated that TDS rates will be rationalised in the Budget 2025 giving much needed relief to taxpayers. The limit for tax deduction at source (TDS) on interest for senior citizens has been being doubled from the present Rs 50,000 to Rs 1 lakh. So this means if your interest amount in a particular bank’s FD is less than Rs 1 lakh, the respective bank will not deduct any TDS.
Moreover, even if the interest amount is more than Rs 1 lakh but your total income after all deductions is less than Rs 12 lakh then you can submit Form 15H and by doing this the bank will not deduct TDS even if the interest is over Rs 1 lakh for FY 2025-26 (AY 2026-27).
Form 15H is a self-declaration form that senior citizens (60 years & above) can submit to avoid TDS on income, provided their total net tax liability is zero. Do note that the TDS deducted by banks can very well be claimed at the time of ITR filing, so it's not like any extra tax, but it's like an additional tax compliance process to follow.
Chartered Accountant Ashish Karundia says: "Form 15H offers a valuable opportunity for senior citizen taxpayers to receive specified income from the payer without any tax deduction, up to Rs 12 lakh under the new tax regime, as the tax payable would-be Nil after considering the Section 87A rebate. Essentially, if eligible for TDS exemption, there's no need to let tax be deducted and then claim a refund. Additionally, timely submission of Form 15H ensures better liquidity in the hands of senior citizens."
Senior citizen Bank FD interest rate for one year tenure
Senior citizen FD rate up to 8.25%
Bandhan Bank is offering up to 8.25%% interest rate on FDs for one year tenure for senior citizens.
Senior citizen FD rate up to 8%
IndusInd Bank is offering up to 8% interest rate on FDs for one year tenure for senior citizens.
RBL Bank is offering up to 8% interest rate on FDs for one year tenure for senior citizens.
Source: paisabazaar.com as on May 7, 2025
Senior citizen FD rate up to 7.75%
Tamilnad Mercantile Bank is offering up to 7.75% interest rate on FDs for one year tenure for senior citizens.
Higher TDS threshold for senior citizen investing in FDs
While presenting the Budget 2025, tThe finance minister has stated that TDS rates will be rationalised in the Budget 2025 giving much needed relief to taxpayers. The limit for tax deduction at source (TDS) on interest for senior citizens has been being doubled from the present Rs 50,000 to Rs 1 lakh. So this means if your interest amount in a particular bank’s FD is less than Rs 1 lakh, the respective bank will not deduct any TDS.
Moreover, even if the interest amount is more than Rs 1 lakh but your total income after all deductions is less than Rs 12 lakh then you can submit Form 15H and by doing this the bank will not deduct TDS even if the interest is over Rs 1 lakh for FY 2025-26 (AY 2026-27).
Form 15H is a self-declaration form that senior citizens (60 years & above) can submit to avoid TDS on income, provided their total net tax liability is zero. Do note that the TDS deducted by banks can very well be claimed at the time of ITR filing, so it's not like any extra tax, but it's like an additional tax compliance process to follow.
Chartered Accountant Ashish Karundia says: "Form 15H offers a valuable opportunity for senior citizen taxpayers to receive specified income from the payer without any tax deduction, up to Rs 12 lakh under the new tax regime, as the tax payable would-be Nil after considering the Section 87A rebate. Essentially, if eligible for TDS exemption, there's no need to let tax be deducted and then claim a refund. Additionally, timely submission of Form 15H ensures better liquidity in the hands of senior citizens."
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