If you’re a senior citizen looking for a safe and stable investment option that offers attractive returns without the ups and downs of the stock market, bank fixed deposits (FDs) are a smart choice. As of July 2025, some banks in India are offering interest rates as high as 7.85% on 3-year FDs exclusively for individuals aged 60 years and above. These special FD schemes are available for deposit amounts up to ₹3 crore and can help you earn good returns in a secure way. The best part? If your total annual income is below the taxable limit, you can even avoid TDS deductions by submitting Form 15H.
Which Banks Offer the Highest FD Rates for Senior Citizen in July 2025?
Here’s a quick comparison of banks offering the highest FD interest rates for senior citizens for a three-year tenure:
| Bank | 3-Year FD Interest Rate (Senior Citizens) |
|---|---|
| IndusInd Bank | 7.50% |
| RBL Bank | 7.60% |
| Bandhan Bank | 7.75% |
| SBM Bank India | 7.80% |
| YES Bank | 7.85% (Highest) |
Among these, YES Bank is currently offering the highest interest rate of 7.85%, making it an excellent option for senior citizens who want high, fixed returns over three years. These rates are ideal for investors looking to grow their savings without any market-linked risks.
Why Bank FDs Are a Good Option for Senior Citizens
- Guaranteed returns: Unlike stocks or mutual funds, the returns on FDs are fixed and risk-free
- Preferential rates: Senior citizens receive higher interest rates than the general public
- Easy to invest: You can invest online or visit a branch, with flexible options for renewal and premature withdrawal
- TDS benefits: With proper tax planning, you can avoid or claim refunds on TDS
Understanding TDS on FD Interest
TDS (Tax Deducted at Source) is applicable if the interest earned from FDs in a financial year exceeds ₹1 lakh for senior citizens. Even if your total income is non-taxable, banks are required to deduct TDS automatically once this threshold is crossed. This is because banks don’t have complete information about your total income or tax status.
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Let’s say your annual income is ₹11 lakh and you have chosen the new tax regime. You may qualify for a 100% rebate under Section 87A, meaning no income tax is payable. However, your bank may still deduct TDS if your FD interest exceeds ₹1 lakh in a year.
How to Avoid TDS Using Form 15H
If you’re aged 60 or above and your total taxable income is below the government’s exemption limit, you can avoid TDS by submitting Form 15H to your bank. This form is a self-declaration stating that your income is below the taxable threshold.
In the new tax regime, there’s no tax on income up to ₹12 lakh (after rebates under Section 87A), while in the old tax regime, tax is waived for income up to ₹5 lakh (with a higher basic exemption limit for those above 80 years). So, if your income is within these limits, submit Form 15H at the beginning of the financial year to prevent the bank from deducting TDS on your FD interest.
Important Points to Remember
- Interest rates are subject to change, so always check the latest rates on the official websites of the banks before investing
- FD investments are best for those who prefer stable income with minimal risk
- Form 15H must be submitted every year if you want to continue claiming TDS exemption
- Make sure to update your PAN and Aadhaar with the bank to avoid delays or errors in interest payments and tax deductions
- FD interest is fully taxable, but rebates and tax planning can help reduce your liability
Disclaimer: The senior citizen FD rates mentioned above are based on data collected from PaisaBazaar.com and are valid as of 2nd July 2025. Banks may revise their interest rates without prior notice. Investors are advised to visit the official website or nearest branch of the respective bank to confirm the current FD rates and terms before investing.
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