Senior Citizen FD: Rates, 80TTB and TDS Rules 2026

For resident investors aged 60 and above, Senior Citizen FD Rates typically include an extra 0.50 percentage point, while Section 80TTB permits up to ₹50,000 deduction on eligible interest. From FY 2025-26, bank interest below ₹1 lakh annually will not attract TDS, though deposit insurance is capped at ₹5 lakh per bank.

Senior citizens get roughly 0.50% more than the standard rate on bank fixed deposits, a ₹50,000 deduction on interest income under Section 80TTB, and from FY 2025-26 no TDS until bank interest crosses ₹1,00,000 in a year. Used together these three make the effective return meaningfully better than the headline rate suggests. Used carelessly, most of the advantage is lost to tax.

This page covers how each works, the trap in the 80TTB rule that catches most people, and how to structure deposits so you keep more of the interest.

The extra 0.50%

Almost every bank offers residents aged 60 and above an additional rate on term deposits, typically 0.50 percentage points. Some offer a further 0.10% to 0.25% to those aged 80 and above, sometimes branded as a super senior rate.

Three details worth knowing:

• The premium usually applies only to resident senior citizens. NRE and NRO deposits generally do not get it.
• It often does not apply to very short tenures or to bulk deposits above a threshold. Check the specific tenure you want, not the headline.
• Age is tested on the date of deposit. Turning 60 next month is not enough.

Rates change frequently and vary widely between large public sector banks, private banks and small finance banks. Rather than quoting numbers that will be stale, compare the current published rate cards for the exact tenure you want on the day you invest. Small finance banks usually pay the most, which brings us to a point worth making plainly.

Deposit insurance is the real limit on chasing yield

Bank deposits are insured by DICGC up to ₹5 lakh per depositor per bank, covering principal and interest together, across all your accounts at that bank.

If a small finance bank offers 1.5% more than a large bank, that difference is compensation for risk, not free money. The sensible response is not to avoid such banks but to stay inside the insured limit at each one. A retiree with ₹40 lakh to deploy should think in terms of several banks rather than one.

Note the limit is per bank, not per branch or per account. Three deposits at the same bank share one ₹5 lakh cover.

Section 80TTB: ₹50,000 deduction, with one condition

Section 80TTB allows a resident senior citizen to deduct up to ₹50,000 of interest income, or the actual interest earned if lower.

It is broader than people assume. It covers interest from savings accounts, fixed deposits and recurring deposits, with banks, co-operative banks and the post office. It is not restricted to FDs.

The condition that catches everyone: 80TTB is available only under the old tax regime. Choose the new regime under Section 115BAC and the deduction is not available at all.

Since the new regime is now the default, this matters. A senior citizen whose income is largely interest may be better off in the old regime purely because of 80TTB, or may not be, depending on the slabs and other deductions. The only way to know is to compute both. Do not let the default decide it for you.

One more point: 80TTB replaces Section 80TTA for senior citizens. You cannot claim both.

TDS: the ₹1 lakh threshold

Banks deduct tax at source on interest once it crosses a threshold. From FY 2025-26 that threshold for senior citizens is ₹1,00,000 per bank per financial year, raised from ₹50,000.

Two things people consistently get wrong about TDS.

TDS is not the tax. It is an advance collection. If your total income is below the taxable limit, you claim it back as a refund. If your slab rate is higher than the TDS rate, you owe the balance. TDS being deducted does not settle your liability.

The threshold is per bank. Interest is aggregated across all branches of one bank, but not across different banks. This is why splitting deposits across institutions has a tax effect as well as an insurance effect.

Form 15H

If your total income for the year will be below the taxable limit, submit Form 15H to each bank at the start of the financial year and no TDS will be deducted.

Practical points:

• File it in April. Filed in November, it cannot recover TDS already deducted, which then requires a refund claim.
• File separately at every bank. It is not centralised.
• Only file if the declaration is true. It is a declaration that your estimated total income is below the taxable limit, and a false one has consequences.
• Form 15H is for those aged 60 and above. Form 15G is the equivalent for others.

Interest is taxed as it accrues, not when you receive it

This is the mistake that produces unexpected demands on five-year cumulative deposits.

Interest on a fixed deposit is taxable on an accrual basis. On a five-year cumulative FD paying everything at maturity, tax is due each year on the interest credited that year, even though no money has reached you.

People who declare the entire amount in the maturity year create a mismatch with the bank’s TDS reporting, which flows into Form 26AS and the Annual Information Statement year by year. Reconcile your declared interest against 26AS and AIS annually.

Structuring deposits sensibly

For a retiree living on interest income, four decisions carry most of the outcome.

Split across banks. It keeps you inside the ₹5 lakh DICGC cover at each institution and keeps interest under the per-bank TDS threshold. Both benefits come from the same action.

Ladder the maturities. Rather than one large five-year deposit, run several maturing at intervals. You get periodic access without breaking a deposit, and you re-price part of the portfolio each year instead of locking everything at one point in the rate cycle. With the repo rate at 5.25% and the RBI on hold, laddering is a reasonable hedge against being wrong about the direction of rates.

Choose payout versus cumulative deliberately. Monthly or quarterly payout suits someone who needs income. Cumulative compounds but creates the accrual issue above. Neither is better in the abstract.

Consider the alternatives for part of the money. The Senior Citizens Savings Scheme and the RBI Floating Rate Savings Bonds are worth comparing, as is the Post Office Monthly Income Scheme. They have their own limits and lock-ins, and are not substitutes for liquidity, but a retiree with everything in bank FDs is usually leaving something on the table.

Common questions

Is the 0.50% extra guaranteed by RBI?
No. It is a commercial decision by each bank, not a regulatory requirement, and the amount varies.

Can I claim 80TTB in the new regime?
No. It is available only under the old regime.

Does the ₹5 lakh insurance cover interest?
Yes, principal and interest together, up to ₹5 lakh per depositor per bank.

If I submit Form 15H, do I still need to file a return?
Possibly. Form 15H stops TDS. It does not decide whether you must file. Filing obligations depend on your income and other conditions.

Are tax-saving five-year FDs worth it for a senior citizen?
Only under the old regime, where the deposit qualifies under Section 80C. They carry a five-year lock-in with no premature withdrawal, and the interest remains fully taxable.

The short version

Take the 0.50% premium, but keep each bank inside ₹5 lakh so DICGC cover holds. Compute old regime versus new before assuming 80TTB is available, because it exists only in the old one. File Form 15H in April at every bank if your income is below the limit, and declare interest as it accrues each year rather than at maturity.