Archive · 4 Sep 2026
Senior Citizen FD Rates Reach 8.50%, But Taxes Reduce Returns
Some banks are offering senior citizens fixed deposits with interest rates as high as 8.50%.
This rate applies only when the money stays deposited for certain periods.
The advertised rate is not the same as the money a person keeps after tax.
FD interest is counted as income and may increase the tax a person must pay.
Senior citizens may claim a deduction of up to ₹50,000 on eligible deposit interest.
This deduction does not automatically make ₹50,000 completely tax-free.
Banks may take 10% TDS when interest crosses the applicable ₹1 lakh threshold.
Retirees should also check withdrawal rules, deposit insurance and the bank’s financial strength before investing.
Equitas, ESAF and Suryoday Small Finance Bank offer senior citizens rates of up to 8.50% for specific tenures.
Jana, Ujjivan, Shivalik and Utkarsh Small Finance Bank offer rates between 8.25% and 8.30%.
FD interest remains taxable as income from other sources under the Income-tax Act, 2025.
Senior citizens can claim a deduction of up to ₹50,000 on eligible deposit interest under Section 153.
Banks generally deduct 10% TDS after deposit-interest exceeds the ₹1 lakh senior-citizen threshold, but final tax depends on total income and tax regime.
- Who
- Senior citizens and banks offering fixed deposits, including Equitas Small Finance Bank, ESAF Small Finance Bank and Suryoday Small Finance Bank.
- What
- Senior-citizen FD rates can reach 8.50%, but taxable interest, deductions and TDS affect actual returns.
- When
- The listed rates are stated as of September 2, 2026; related rate information was updated on August 26, 2026.
- Where
- The rates apply to fixed deposits at listed Indian small finance, private-sector, public-sector and foreign banks.
- Why
- To explain how taxes and other FD conditions affect the income senior citizens receive from advertised interest rates.
- Highest stated rate
- 8.50% for senior-citizen FDs
- Banks offering 8.50%
- Equitas Small Finance Bank, ESAF Small Finance Bank and Suryoday Small Finance Bank
- Maximum-deposit scope
- Deposits below ₹3 crore
- Tax treatment
- FD interest is generally treated as income from other sources under Section 92 of the Income-tax Act, 2025
- Senior-citizen deduction
- Up to ₹50,000 on eligible deposit interest under Section 153
- TDS threshold
- ₹1 lakh of specified deposit interest for senior citizens
- General TDS rate
- Banks generally deduct 10% after the applicable threshold is crossed