FD rate up to 8.6% for senior citizens for 5 yr term

A few banks are still offering interest rates as high as 8.6% on fixed deposits (FDs) for senior citizens (aged 60 years and above) for a five-year term, for deposits up to Rs 3 crore.

Check out the list below to find out which banks provide FD interest rates that hit 8.6% for senior citizens.

Bank FD interest rate for senior citizens

FD rate up to 8.6% for senior citizens

Suryoday Small Finance Bank is offering 8.6% interest on FDs with a five-year term for senior citizens.

FD rate up to 8% for senior citizens

Jana Small Finance Bank is offering 8% interest on FDs with a five-year term for senior citizens.

Source: paisabazaar.com as of November 4, 2026

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

When is TDS deducted from bank FDs?

Banks are mandated to deduct tax deducted at source (TDS) if the interest from a fixed deposit (FD) crosses Rs 1 lakh in a specific bank. Remember, TDS isn't an additional tax; you can get it back as a tax refund or offset it against your total tax liability when you file your income tax return (ITR). Plus, if you are eligible for a tax refund, you might also be eligible for interest on that refund.

For example, if a senior citizen has an income of Rs 11 lakh, they won't have to pay income tax thanks to the Section 87A tax rebate under the new tax regime for FY 2025-26. The Section 87A tax rebate applies to income up to Rs 12 lakh under the new tax regime for FY 2025-26.

Moreover, a senior citizen can submit Form 121 to avoid TDS deduction, if their total income, after claiming all tax deductions and the Section 87A rebate, is below the taxable limit, which is Rs 12 lakh for the new tax regime or Rs 5 lakh for the old tax regime.

Chartered Accountant (Dr.) Suresh Surana says that Form 15H (now renumbered as Form 121) is a self-declaration form that senior citizens (60 years & above) can submit to avoid TDS on income, provided their total tax liability is zero.

Surana says that the eligibility for new Form No. 121 is as follows:

In case of Individuals below 60 years & other person such as HUF, Trusts etc: The tax liability on estimated total income for the tax year is nil and the aggregate of specified incomes (on which TDS is applicable) does not exceed the maximum amount not chargeable to tax.

In case of Individuals aged 60 years or more (Senior citizens): The tax on estimated total income is nil.

Accordingly, a senior citizen may submit Form 121 if tax on their estimated total income for the tax year is nil. It is pertinent to note that these thresholds are not standalone eligibility limits and the taxpayer must calculate their tax liability after considering the applicable regime, eligible deductions, exemptions and rebate.

For determining whether tax liability is nil, the applicable tax regime and any eligible rebate, deductions, exemptions etc must be considered. Under the new tax regime, a resident individual with total taxable income up to Rs 12 lakh may have nil tax liability after the Section 156(2) of the Income Tax Act, 2025 (corresponding to Section 87A of the Income Tax Act, 1961) rebate. Under the old tax regime, the basic exemption limit is Rs 2.5 lakh (enhanced to Rs. 3 lakh for resident individuals aged 60 years or more and Rs 5 lakh for resident individuals aged 80 years or more). The Section 156(1) of the Income Tax Act 2025 (corresponding to Section 87A of the Income Tax Act, 1961) rebate may also result in nil tax where a resident individual's total taxable income does not exceed Rs 5 lakh.

Even though no income tax is charged on an annual income below Rs 12 lakh, banks and other financial institutions still have to deduct TDS. This is because the law requires them to deduct TDS once the interest/income amount surpasses a certain limit -- Rs 1 lakh in case of senior citizens. Banks are not aware of individual tax liabilities and will deduct TDS whenever the annual interest exceeds Rs 1 lakh. Hence it's better to submit Form 121 to let the banks know.

Does a senior citizen who filed Form 121 need to file ITR?

Surana says that filing Form 121 (previously Form 15H) and filing an Income-tax Return (ITR) are two separate compliances. Form 121 is merely a declaration furnished) to request non-deduction of TDS where the senior citizen estimates that the tax on his or her total income for the year will be nil. Filing Form 121 does not, by itself, exempt a taxpayer from the obligation to file an income-tax return where such obligation otherwise exists under the Act.

Accordingly, a senior citizen who has submitted Form 121 may still be required to file an ITR if any of the prescribed return-filing conditions are triggered, such as where the total taxable income exceeds the basic exemption limit or where any of the specified mandatory return filing requirements under the Act become applicable.

On the other hand, if the senior citizen's income is below the applicable basic exemption limit and no other mandatory filing conditions are applicable, the taxpayer may not be required to furnish their return. Further, specified senior citizens are exempt from furnishing their tax returns u/s Section 263(8) in The Income Tax Act, 2025 (corresponding to Section 194P of the Income Tax Act, 1961) provided the following conditions are fulfilled:

Senior Citizen should be of age 75 years or above

Senior Citizen should be 'Resident' in the previous year

Senior Citizen has pension income and interest income only & such interest income accrued / earned from the same specified bank in which he is receiving his pension

The senior citizen will submit a declaration to the specified bank.

The bank is a 'specified bank' as notified by the Central Government. Such banks will be responsible for the TDS deduction of senior citizens after considering the deductions under Chapter VIII (Chapter VI-A of the ITA 1961) and rebate under Section 156 (corresponding to S. 87A of Income Tax Act,1961).

Once the specified bank, as mentioned above, deducts tax for senior citizens above 75 years of age, there will be no requirement to furnish income tax returns by senior citizens.