Fixed Deposits for Senior Citizens: Senior Citizen FD Rates, Eligibility, Taxation & smallcase FDs
Fixed Deposits (FDs) are a popular investment choice due to their safety and guaranteed returns. Senior Citizen Fixed Deposits offer special interest rates to individuals over 60. The interest rates are typically higher than those available to the general public. These premium rates, ranging from 0.2% to 0.7%, depend on factors like the bank and scheme. One crucial factor influencing the interest rate is the tenure of the deposit. This article will discuss senior citizen fixed deposits and how you can book one on smallcase!
What are Senior Citizen FDs?
Senior citizen fixed deposits (FDs) are term deposit plans. These plans usually come with special interest senior citizen FD rates for individuals that are aged over 60. In India, these FD interest rates for senior citizens can range from 3.00% to 8.50% for tenures from less than one year to over five years.
These FDs offer an additional interest rate. This interest rate can typically be 0.50% higher than regular rates. Its benefits include a regular interest payout option, providing a steady income during retirement, and the ability to obtain a loan against the FD if needed.
Bank FD Rates for Senior Citizens Based on Tenure
| Period (months) | At Maturity (p.a.) | Monthly (p.a.) | Quarterly (p.a.) | Half Yearly (p.a.) | Annual (p.a.) |
| 12 – 14 | 7.65% | 7.39% | 7.44% | 7.51% | 7.65% |
| 15 – 17 | 7.75% | 7.49% | 7.53% | 7.61% | 7.75% |
| 18* | 8.05% | 7.77% | 7.82% | 7.89% | 8.05% |
| 19 – 21 | 7.75% | 7.49% | 7.53% | 7.61% | 7.75% |
| 22* | 8.15% | 7.86% | 7.91% | 7.99% | 8.15% |
| 23 | 7.75% | 7.49% | 7.53% | 7.61% | 7.75% |
| 24 – 32 | 8.20% | 7.91% | 7.96% | 8.04% | 8.20% |
| 33* | 8.35% | 8.05% | 8.10% | 8.18% | 8.35% |
| 34 – 35 | 8.20% | 7.91% | 7.96% | 8.04% | 8.20% |
| 36 – 41 | 8.35% | 8.05% | 8.10% | 8.18% | 8.35% |
| 42* | 8.65% | 8.33% | 8.38% | 8.47% | 8.65% |
| 43 | 8.35% | 8.05% | 8.10% | 8.18% | 8.35% |
| 44* | 8.50% | 8.19% | 8.24% | 8.33% | 8.50% |
| 45 – 60 | 8.35% | 8.05% | 8.10% | 8.18% | 8.35% |
Note: The data on this list has been taken on 23rd July, 2024.
Eligibility for Senior Citizen FDs
Here are a few potential eligibility criteria that may apply to senior citizen FDs:
- To open a senior citizen fixed deposit (FD) in India, you must be a resident and over 60 years old.
- Non-Resident Indian (NRI) senior citizens can also open these FDs through NRE or NRO accounts.
- Some banks may permit individuals over 55 who have taken early retirement to apply, but this varies by institution and specific terms.
- Some banks offer higher interest rates to super senior citizens, those over 80 years old, compared to other senior and general citizens.
Documents Required for a Senior Citizen FD
Here are a few documents that may be required while booking a senior citizen FD:
- Proof of Age: Valid documents such as a passport, Aadhaar card, or PAN card. The required age of senior citizen for bank FD is usually over 60.
- Photograph: A recent passport-size photograph.
- KYC Documents: This includes your PAN card, Aadhaar card, passport, driving license, or voter ID.
- Account Opening Application: Complete the FD account opening application form.
- Form 15H or Self-Declaration Form: Necessary for tax purposes.
Features of a Senior Citizen FDs
Here are a few key features that senior citizen FDs may have in common:
- Tenure: The deposit period can range from 7 days to 10 years, depending on the bank.
- Interest Rates: Banks determine the fixed deposit interest for senior citizens based on the duration of the deposit. They often offer an additional rate for seniors (typically between 0.2% to 0.7%).
- Interest Compounding: Interest is usually compounded quarterly, though some banks offer monthly, semi-annual, or annual compounding. At this time, smallcase only offers fixed deposit schemes with a payout at maturity and a quarterly compounding frequency.
- Nomination: Seniors can nominate someone to receive the funds in case of their death.
- Premature Withdrawal: Fixed deposits can be closed early, but this might incur penalties. Tax-saver FDs, which have a 5-year lock-in period, do not allow premature withdrawals.
- Tax Benefits: Deposits with a 5-year term qualify for tax deductions under Section 80C up to Rs. 1.5 lakh.
- Deposit Limits: Deposit amounts can range from Rs. 1 cr. to higher amounts, as determined by the bank. Bulk deposits, starting from Rs. 2 cr., might not offer preferential rates.
These FDs cater specifically to seniors. They combine flexibility, competitive interest rates, and potential tax savings.
Benefits of Senior Citizen FDs
Here are a few potential benefits of senior citizen FDs:
- Higher Interest Rates: FD for senior citizens can typically offer interest rates ranging from 3.25% to 6% per annum, which are higher than those available to the general public. This can results in more substantial earnings on your investment. This can also enhance your financial security.
- Tax Savings: These fixed deposits can help you save on taxes. Under Section 80C of the Income Tax Act, you can claim deductions on the interest earned, reducing your taxable income and increasing your net returns.
- Guaranteed Returns: Unlike market-linked investments, senior citizen FDs provide guaranteed principal and returns. Even the highest fixed deposit interest rates for senior citizens remain constant throughout the term. This can ensure predictable and stable income, irrespective of market fluctuations.
- Flexible Interest Payouts: Senior citizens can choose from various interest payout options, including short-term, mid-term or long-term. This flexibility allows you to align your investment with your financial needs, ensuring a regular and dependable income stream.
- Supplementary Income: The interest earned on senior citizen FDs can act as a supplementary income. This can provide financial stability during retirement. This regular income can help you plan and manage your retirement expenses more effectively.
- Safe Investment: Senior Citizen FDs are considered one of the most reliable and secure investment options. Your money grows steadily in a safe environment. This can offer peace of mind and financial assurance during your retirement years.
Introducing Fixed Deposits on smallcase
Discover high-interest fixed deposits from RBI-regulated banks on the smallcase app. These fixed deposits offer secure and stable returns, helping you diversify your investments beyond volatile markets. Here’s what you need to know about FDs on smallcase:
Currently, smallcase only offers fixed deposit schemes with a payout at maturity and a quarterly compounding frequency. When comparing two fixed deposit schemes with the same tenure, investment amount, and interest rate, the one with a higher compounding frequency will yield a higher annualised return. Therefore, FDs with quarterly compounding yield more than those with semi-annual or annual compounding.
Fixed deposits on smallcase provide a secure and straightforward investment option with high interest rates and the convenience of a fully digital process. Whether you seek stable returns or wish to diversify your portfolio, FDs on smallcase can be an excellent choice.
Types of Fixed Deposits Offered by smallcase
There are two types of fixed deposits offered by smallcase. They are:
- Cumulative Fixed Deposits (FDs): The interest compounds quarterly in this type of FD. Interest is added to the principal amount and then is reinvested, with the total payout at maturity.
- Senior Citizen Fixed Deposits: These FDs typically have higher interest rates than standard FDs. Premiums on senior citizen deposits can range from 0.2% to 0.7%. This depends on the bank and scheme.
How to Book a Senior Citizen FD on smallcase?
Here is how one can book a fixed deposit, senior or otherwise, via smallcase:
- Select a Bank: Interested candidates can compare fixed deposit rates for senior citizens offered by different partner banks.
- Choose a Scheme: After selecting the bank, one needs to choose the FD scheme. This choice can be made based on the tenure of the FD, i.e. short-term, medium-term, or long-term.
- Verification: After selecting a scheme, one is required to verify their PAN and Aadhaar digitally.
- Additional Verification: Complete additional KYC details that may be required. These may include address, personal/professional details, and nominee selections.
- Make Payment: After selecting the scheme and completing verification, one can pay for their FD through net banking or UPI.
- Video KYC: Some partner banks may require additional video KYC completion based on the amount.
Interested candidates can explore more about the smallcase fixed deposits here.
Why Book an FD on smallcase?
Here are a few reasons why one might consider smallcase for their fixed deposits:
- High Interest Bank FDs: Banks on smallcase offer some of the best FD rates for senior citizens and otherwise. This can ensure competitive returns on your investments.
- Insured Investment up to Rs. 5 Lakh: All FDs on smallcase are regulated by the RBI and insured by DICGC. This covers FD amounts up to Rs. 5 lakh per bank.
- Seamless Digital Process: Every step is conducted digitally at smallcase from booking to withdrawal. This eliminates the need for paperwork or bank visits.
Interest Payout and Compounding Frequency for FDs on smallcase
- Interest Payout Frequency: Interest payout frequency determines how often you receive interest payments on your fixed deposit (FD). For FDs on smallcase, interest is
- paid at maturity.
- Compounding Frequency: Compounding frequency indicates how often interest is calculated and added to the principal in a cumulative FD. Banks on smallcase usually compound interest quarterly, which offers better rates compared to semi-annual or annual compounding.
- Interest Calculation: In smallcase cumulative FDs with quarterly compounding, interest is calculated every three months and added to the principal. This new principal amount then earns interest for the next period.
Here is the formula that is used to calculate the interest amount:
A=P(1+r/n)^nt
Here,
- A: Maturity amount
- P: Principal amount
- r: Annual interest rate
- n: The number of times interest is compounded per year (for quarterly, n=4)
- t: Tenure in years
Premature Withdrawal Charges for FDs on smallcase
Here are the premature withdrawal charges depending on the bank you choose for your FDs on smallcase:
- Shivalik Bank: The interest rate earned, in case of premature withdrawal, will be 1% less than the applicable interest rate or booking rate, whichever is lower.
- Suryoday Small Finance Bank (SFB): There are no penalties for FDs that are within a 1-year tenure. Otherwise, there is a penalty of 1%>
- Utkarsh Small Finance Bank (SFB): 0% penalty.
Taxation on Senior Citizen FDs
NRE deposits are generally exempt from taxes, while interest earned on NRO and FCNR deposits is taxable. Interest on fixed deposits (FDs) is considered “income from other sources” and added to your total income under the Income Tax Act, 1961. The tax on this interest depends on your overall income and applicable tax rates.
TDS on Fixed Deposits
Banks deduct Tax Deducted at Source (TDS) on interest annually, not just at maturity. The general exemption limit for TDS is Rs. 40,000 per year, while for senior citizens (above 60 years), it is Rs. 50,000. If your interest income exceeds these limits, the bank will deduct TDS; if it is below these limits, no TDS is deducted.
The TDS deducted is not your total tax liability. Your actual tax is based on your total income and the tax slab you fall into for the year. You may need to pay additional tax if you are in a higher tax bracket or get a refund if you are in a lower tax bracket.
If your FD interest exceeds Rs. 40,000 in a financial year, the bank will deduct TDS at 10% for PAN holders and 20% for non-PAN holders. For cumulative FDs, where interest is paid at maturity, TDS is still deducted each year on the interest earned.
If your total income is less than Rs. 2,50,000 (the minimum taxable income), you do not have to pay tax, and no TDS will be deducted. To avoid TDS, submit Form 15G (for those below 60) or Form 15H (for senior citizens) at the start of the financial year.
To Wrap It Up…
Senior citizen FDs provide added benefits for individuals aged over 60 years and this creates an investment avenue coupled with opportunities and safety. smallcase FDs can be a way for investors to acquire high interest rates and the convenience of a completely digital process! You can now explore senior citizen FDs on smallcase in a secure and straightforward fashion.
Frequently Asked Questions About Senior Citizen FDs
Senior citizen fixed deposits are term deposit plans designed for individuals aged over 60 years. In India, these FDs can offer interest rates from 3.00% to 8.50%, depending on the tenure, which can range from short to long-term.
Individuals who meet the eligibility criteria and are over 60 can apply for senior citizen FDs. Some banks may offer special plans for individuals over 55, but this is only for select banks.
Senior citizen fixed deposits offer higher interest rates than regular fixed deposits. Banks usually provide premiums on senior citizen deposits that can range from 0.2% to 0.7%, making them some of the highest FD rates for senior citizens.
Banks and NBFCs can offer higher interest rates to super-senior citizens (those over 80) than to regular senior citizens (those aged 60 to 80).
Banks deduct Tax Deducted at Source (TDS) on interest annually, not just at maturity. The general exemption limit for TDS is Rs. 40,000 per year, while for senior citizens (above 60 years), it is Rs. 50,000.
