Senior Citizens investing for 3 years get 8.5% on FD – Know the list of Banks

Some banks continue to offer interest rates of up to 8.5% on fixed deposits (FDs) made by citizens aged 60 and above for a term of three years, with a maximum limit of Rs 3 crore. Slice Small Finance Bank is offering 8.25% interest rate on FD for three year tenure for senior citizens.

Source: Paisabazaar.com as of July 16, 2025

FD rate up to 8.15%

Suryoday Small Finance Bank is offering up to 8.15% interest rate on FD for three year tenure.

Disclaimer: While deposits in small finance banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, experts advise investors to be cautious when investing in their FDs. Given their unique business model, the risk associated with investing in FDs of small finance banks may differ slightly from that of scheduled commercial banks. To mitigate potential risks, investors are advised to limit their exposure to small finance bank FDs to an amount that is within the DICGC’s coverage. This ensures that their principal and interest are protected in the event of unforeseen circumstances.

When is TDS deducted from bank FDs?

Banks are required to deduct tax deducted at source (TDS) if the interest earned on a fixed deposit (FD) exceeds Rs 100,000 at a particular bank. Note that TDS is not an additional tax; you can claim it as a refund or deduct it from your total tax liability when filing your Income Tax Return (ITR). Additionally, if you qualify for a tax refund, you may also be entitled to the interest on that refund.

For example, if a senior citizen has an income of Rs 110,000, they will not have to pay income tax thanks to the Section 87A tax rebate under the new tax regime for the 2025-26 tax year. The Section 87A tax rebate applies to income up to Rs 120,000 under the new tax regime.

Additionally, a senior citizen can file Form 15H to avoid deducting TDS if their total income, after applying all deductions and Section 87A refunds, is less than the taxable limit, which is Rs 12 lakh for the new tax regime or Rs 5 lakh for the old one.

Although income tax is not levied on income below Rs 12 lakh, banks and other financial institutions will still deduct TDS. This is because they are required by law to deduct TDS once the amount of interest/income exceeds a certain threshold, which is Rs 1 lakh for senior citizens. Banks are unaware of individual tax obligations and will deduct TDS when annual interest exceeds Rs 1 lakh. Therefore, file Form 15H to inform the banks.