By Samannay Biswas
Copyright timesnownews
Senior citizens looking for safe investment options can now earn up to 8.4% interest on fixed deposits (FDs) with select banks. These attractive rates are available on deposits of up to Rs 3 crore for a tenure of five years, making them a popular choice for retirees who want regular income with low risk. The highest returns are currently being offered by small finance banks, though investors are advised to stay mindful of the risks and coverage limits under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. Top FD rates for senior citizens (as of September 24, 2025) Bank Name Suryoday Small Finance Bank 8.4% – Maximum FD Interest Rate for Senior Citizens5 years – TenureJana Small Finance Bank 8% – Maximum FD Interest Rate for Senior Citizens5 years – TenureUtkarsh Small Finance Bank 7.75% – Maximum FD Interest Rate for Senior Citizens3 years – – Tenure Source: Paisabazaar.com DICGC insurance and safety While these rates are significantly higher than those offered by large commercial banks, experts caution that small finance banks carry slightly different business risks. All deposits , whether with small finance banks or scheduled commercial banks , are insured up to Rs 5 lakh (principal + interest) under DICGC. To stay safe, financial planners recommend not exceeding this limit per bank, so that the investment remains fully protected in case of unforeseen events. TDS rules on fixed deposits Banks are required to deduct Tax Deducted at Source (TDS) if the annual FD interest earned by a senior citizen exceeds Rs 1 lakh in a financial year. Important to note: TDS is not an additional tax. It is only an advance deduction. You can adjust it while filing your Income Tax Return (ITR) and claim a refund if your tax liability is lower.Form 15H: Senior citizens whose taxable income (after rebates and deductions) is below the exemption limit can submit Form 15H to their bank to avoid unnecessary TDS deductions. Tax benefits for senior citizens (FY 2025-26) Under the new tax regime, income up to Rs 12 lakh is tax-free after applying the Section 87A rebate.Under the old tax regime, income up to Rs 5 lakh is tax-free after the rebate.Even though no tax may be due on income under these thresholds, banks are still legally required to deduct TDS once FD interest crosses Rs 1 lakh, unless Form 15H is submitted. Why FDs remain attractive for seniors Guaranteed returns: Interest is fixed and not affected by market volatility.Regular income: Monthly/quarterly payout options help retirees manage household expenses.Low risk: Safer than equities and mutual funds, especially for conservative investors.Flexibility: Multiple tenure options, from a few months to 10 years.
