Senior citizen fixed deposits: the extra rate, the TDS limit and the tax rules

A senior citizen fixed deposit is an ordinary bank fixed deposit held by a resident aged 60 or more. A bank may pay it at a higher rate. SBI's card, in force since 15 December 2025, pays 0.5 percentage points more on most tenures (a percentage point is the gap between two rates). The tax side changes too. A bank deducts TDS, tax taken out before the interest reaches you, only once a senior's interest from it passes ₹1,00,000 in a tax year. A tax year is the twelve months from 1 April. For everyone else the line is ₹50,000.

What is a senior citizen fixed deposit?

It is a regular bank fixed deposit (FD) that a bank pays at a senior rate because the holder is 60 or more. In an FD you leave money with a bank for a set period, called the tenure, and the rate is fixed when you open it.

Two different ages are at work, and it helps to keep them apart.

• For tax, a senior citizen is a resident of India aged 60 or more at any time in the tax year.
• For the bank's rate, the bank's own rule applies. At SBI, the senior rate follows the date of birth in the bank's records. An existing FD switches over automatically once the holder turns 60.

This is not a government scheme. The government's own scheme for people aged 60 or more is the Senior Citizens' Savings Scheme (SCSS). It takes one deposit of up to ₹30 lakh for five years and pays interest quarterly. It pays 8.2% a year for accounts opened from 1 October to 31 December 2026. The SCSS article covers it in full. Post office time deposits pay one rate to everyone, with no senior column; the senior option at the post office is SCSS. See post office savings schemes.

How much extra interest do senior citizens get on an FD?

That is up to each bank. RBI lets banks pay resident senior citizens a higher rate. It does not allow this on a deposit held in the name of a Hindu Undivided Family (HUF). An HUF is a family that can hold a deposit in its own name. That holds even if the karta, the person through whom the HUF holds it, is a senior.

SBI makes a good example. The card rate is the rate a bank publishes for each tenure. Here is SBI's card for retail term deposits below ₹3 crore, in force since 15 December 2025, in per cent a year.

*Includes SBI's extra 0.50 percentage point "We-care" premium. A percentage point is the gap between two rates, so 6.25% to 6.75% is half a point.

On this card the senior extra is 0.50 percentage points for every tenure under 5 years and 1.00 point for 5 to 10 years. Under its SBI Patrons offer, SBI adds 0.10 percentage points more for customers aged 80 and above on deposits that can be broken early. That extra does not apply to the Tax Savings Scheme 2006 or to recurring deposits.

SBI pays the senior extra from ₹10,000. It does not pay it to non-resident seniors, an HUF's karta or a senior holding for a minor.

What does the gap look like in rupees? Take ₹1,00,000 in an SBI cumulative FD for 5 years, which adds interest every quarter and pays it all at maturity, as SBI states for these deposits of 6 months and above. At the general 6.05% it grows by ₹35,018. At the senior 7.05% it grows by ₹41,826, which is ₹6,808 more. These figures are before tax, at the rates on SBI's card of 15 December 2025.

Rates change. Check the bank's own page on the day, and try your own numbers in the fixed deposit calculator.

What is the TDS limit on FD interest for senior citizens?

A bank, co-operative bank or post office deducts TDS only once a senior's interest from it passes ₹1,00,000 in a tax year. For anyone else the line is ₹50,000. TDS is tax deducted at source: the bank keeps part of the interest and pays it to the government before the money reaches you.

The line works like this.

• It covers the whole tax year in which you turn 60.
• There is no separate line at 80.
• It applies to residents. Non-residents fall under a different rule.
• The bank counts all its branches together, and each bank counts only its own interest. Splitting an FD across branches of one bank does not avoid TDS.
• The rate is 10% for a resident who is not a company and has given a PAN. Without a valid PAN the bank deducts at the highest of the Act's rate, the rates in force, or 20%.
• When a bank credits a cumulative FD's interest in its books each year, it can deduct TDS every year, though nothing has been paid out.

A company FD is different. A company deducts TDS once your interest from it passes ₹10,000 in a year, and there is no higher limit for seniors. The corporate fixed deposits article has the rest.

Here is a worked case. A resident aged 66 keeps ₹13,00,000 in a 1-year SBI FD that pays interest every quarter, at the senior 6.75%. That is ₹87,750 a year, below the ₹1,00,000 line. If that is all the interest SBI pays this person that year, the bank deducts nothing. Someone under 60 with the same deposit earns 6.25%, or ₹81,250. That is above ₹50,000, so the bank deducts 10%, which is ₹8,125. From a company FD, interest of that size is far above ₹10,000, so TDS would apply even for the senior.

TDS is a deduction in advance, not the whole tax. Tax on the interest itself is covered in how FD interest is taxed.

How can a senior citizen stop TDS on FD interest?

Form 121, which replaces Forms 15G and 15H, asks the payer not to deduct TDS. You can give it when the tax on your total income for the year will be nil.

The form has two tests. Under 60, you must say that your tax will be nil. You must also say that the income declared on all your Forms 121 for the year is within the maximum amount not chargeable to tax. At 60 or more, only the nil-tax test applies.

Three more rules apply.

• It works for company deposits as well as bank deposits.
• It needs your PAN. A declaration without one is invalid.
• It covers one tax year. Give it again each April to each bank or company.

Whether your tax will be nil depends on your whole income and your choice of tax regime. There are two: the old regime, which allows deductions such as section 153, and the default new regime. The senior citizens' tax guide explains that choice.

Is FD interest tax-free for senior citizens?

No. FD interest is added to your income and taxed at your slab rate, which is the rate for your income band, at any age.

Seniors get a relief on this interest, with conditions. Under section 153 (the old Section 80TTB), a senior citizen can deduct up to ₹50,000 of interest from taxable income. The interest must be on deposits with a bank, a co-operative bank or a post office. A deduction lowers the income on which tax is worked out. It works only under the old tax regime, with nothing like it in the default new regime. It does not cover interest from company or NBFC deposits.

A five-year tax-saving FD with a scheduled bank counts under section 123 (the old Section 80C), within ₹1,50,000 a year, under the old regime only. SBI gives no 80-and-above extra on its Tax Savings Scheme 2006. See tax-saving fixed deposits.

Can a senior citizen open a joint FD with someone younger?

Yes, but at SBI the senior rate applies only when the senior is the first holder, in "either or survivor" or "former or survivor" mode. That is SBI's rule. Other banks set their own.

For TDS, the bank usually deducts in the first holder's name. A declaration to the bank can have the tax credit go to the holder whose income it is, as rule 203(2) allows.

What stays the same for a senior citizen's FD?

Deposit insurance and the rules for breaking an FD early do not change with age.

• Insurance. DICGC, the Deposit Insurance and Credit Guarantee Corporation, insures each depositor in a bank up to ₹5 lakh, interest included, whatever the age. Company and NBFC deposits have no such cover. See how reliable FDs are.
• Breaking early. An individual's FD of up to ₹1 crore can be broken before maturity. You get the rate for the time it ran, not the contracted rate, minus any penalty the bank disclosed when you opened it. SBI charges seniors the same penalty as everyone else. The premature withdrawal article has the detail.
• Payout. Choices such as regular interest or interest added at maturity are covered in monthly interest on an FD.
• After the holder's death. The steps are in claiming an FD after death.

Koshex offers fixed deposits, both bank and corporate, from ₹10,000. Only bank deposits are insured, up to ₹5 lakh per depositor per bank. You can see what is on offer on the fixed deposit page.