Top Senior Citizen Fixed Deposits in Focus After the Govt Raised TDS Threshold on FD Interest to INR 1 Lakh

The Union Budget 2025-26 is out. Finance Minister Nirmala Sitharaman announced a host of measures to lift India’s economic growth, which is estimated to rise between 6.3% and 6.8% in FY26. Among the measures announced, what caught the eye was the enhancement in the TDS threshold on FD interest from INR 50,000 to INR 1 lakh in a financial year for senior citizens. This essentially means senior citizens can have twice as much headroom to stay exempt from the Tax Deducted at Source (TDS). So, if you are yet to begin your fixed deposit journey with your lump sum retirement savings, here are some senior citizen fixed deposit schemes where you can park money, earn high interest and save taxes. 

In this blog, we will learn the TDS math on FDs before introducing the most sought after senior citizen fixed deposits post this remarkable move.

What is TDS on Fixed Deposit Interest?

The TDS threshold on fixed deposit interest incomes means the extent to which the interest earned is free from the tax. Before Budget announcements, the TDS used to apply to the senior citizen depositors’ interest income only when it exceeded INR 50,000 in a financial year. In FY 2025-26, the TDS on interest income is raised to INR 1 lakh in a financial year. 

So, does the TDS apply to the amount beyond the threshold amount or the whole earnings? The answer to it is the whole amount. So, if your interest income goes to INR 1,50,000 in a financial year, the TDS will apply to INR 1,50,000 and not INR 50,000 (1,50,000-1,00,000). 

The rate of TDS is 10%. Going with the above example, in absolute numbers, the TDS remains at INR  15,000 (10% of INR 1,50,000). In case of no PAN submission, the TDS deduction will be INR 30,000 (20% of INR 1,50,000). 

Banks deduct TDS and deposit it to the government.

How is the Interest Calculated on a Fixed Deposit?

The interest is calculated on a fixed deposit based on the interest-compounding option you choose as an investor. Banks typically offer Monthly, Quarterly, Half-yearly and Annual intervals. Among these, monthly and quarterly options yield you the maximum interest income. Here’s the formula based on which the fixed deposit interest income is calculated.

Compounding Interest = P (1+R/N)NxT - P

P = Principal Investment Amount

R = Rate of Interest

N = Number of Times the Interest is Compounded in a Year

T = Period of Investment

For example, you open a fixed deposit of INR 10 lakh for 3 years at 9.00% per annum with a quarterly interest compounding option. Your interest earnings and TDS across investment years are as follows:

Here are Some Senior Citizen Fixed Deposits You Should Consider Investing in

Shivalik Small Finance Bank Fixed Deposit

Shivalik Small Finance Bank comes across as the preferred fixed deposit investment option for senior citizens. The maximum interest rate for senior citizens is 9.30% per annum. Here’s what the bank’s FD rates across tenures look like for senior citizens.

Striking Features 

• Enjoy flexible FD tenures

• Quarterly compounding interest option available

• Interest payout frequency options - Monthly and Quarterly

• Premature withdrawal facility available

• Auto renewal option available

North East Small Finance Bank Fixed Deposit

North East Small Finance Bank is another bank that offers high interest rates to senior citizen depositors. The bank offers a maximum of 9% per annum to senior citizens. Let’s have a look at impressive rates across tenures.

Striking Features 

• The minimum investment amount required is as small as INR 1,000.

• Enjoy the reinvestment option to grow your money.

• Part withdrawal and auto-renewal facilities are available.

• Make the most of the loan/OD facility to meet your liquidity needs.

Suryoday Small Finance Bank Fixed Deposit

Suryoday Small Finance Bank offers fixed deposit interest rates as high as 9.10% per annum to senior citizens. Let’s check out the interest rates applicable to senior citizens at Suryoday Small Finance Bank.

Striking Features 

• The minimum FD booking amount required is INR 1,000.

• Both interest reinvestment and payout options are available.

• Premature withdrawals are allowed.

Utkarsh Small Finance Bank Fixed Deposit

When it comes to fixed deposits, Utkarsh Small Finance Bank emerges as one of the best solutions for senior citizen depositors. With an interest rate as high as 9.10% per annum, senior citizens find Utkarsh Small Finance Bank’s fixed deposit increasingly appealing. Let’s glance at the fixed deposit interest rates Utkarsh has for senior citizens.

Striking Features

• The minimum investment amount required is as low as INR 1,000.

• Competitive interest rates

• Flexible fixed deposit tenure

South Indian Bank Fixed Deposit

South Indian Bank is another trusted name in the fixed deposit landscape. Its impressive interest rates are one of the reasons why senior citizens trust it for their fixed deposit needs. Let’s check out the rates without any further delay.

Striking Features

• Both monthly and quarterly interest payout options are available.

• Periodical interest withdrawals or transfers are allowed.

• An auto-renewal option is available.

• High interest rates to raise your money.

Conclusion

After the tax threshold is raised on fixed deposit interest, senior citizens’ joy has doubled. They now have more room for tax savings. If you are searching for a platform where you can book a high-yield fixed deposit, look no further than BharatFD. It’s an online marketplace where trusted banks are listed with high interest rates. As an investor, you don’t need a savings account with these banks to open a fixed deposit account. So, what are you waiting for? Download the BharatFD app and book your FD now.