Major banks and post office pay an interest rate of 4-7.75% to senior citizens on FDs of up to 5 yearsMajor banks across the country offer an interest rate ranging from 4 to 7.75 per cent on fixed depositsof up to Rs 1 crore for a term lower than five years.
India Post, which has a network of more than 1.5 lakh post offices across the country, pays an interest rate of6.6-7.4 per cent on deposits for a term of 1-5 years.
Most financial institutions pay slightly higher rates to senior citizens on bank deposits across several maturity periods (terms).
According to financial planners, fixed deposits are suitable for investors looking for fixed returns with minimum risk.Here's a comparison of interest rates paid by State Bank of India, HDFC Bank, ICICI Bank and India Post (post office) to senior citizen customers on fixed deposits up to Rs 1 crore:State Bank of India (SBI)TermInterest rate offered to senior citizen (with effect from July 30, 2018)7 days to 45 days6.25%46 days to 179 days6.75%180 days to 210 days6.85%211 days to less than 1 year6.90%1 year to less than 2 year7.20%2 years to less than 3 years7.25%3 years to less than 5 years7.30%5 years and up to 10 years7.35%(Source: sbi.co.in)HDFC BankTermInterest rate offered to senior citizen(with effect from August 6, 2018)7 - 14 days4.00%15 - 29 days4.75%30 - 45 days6.25%46 - 60 days6.75%61 - 90 days6.75%91 days - 6 months6.75%6 months 1 day- 6 months 3 days7.25%6 months 4 days7.25%6 months 5 days- 9 months7.25%9 months 1 day- 9 months 3 days7.50%9 months 4 days7.50%9 months 5 days - 9 months 15 days7.50%9 months 16 days7.50%9 months 17 days < 1 Year7.50%1 Year7.75%1 year 1 day - 1 year 3 days7.75%1 year 4 days7.75%1 year 5 days - 1 Year 15 Days7.75%1 Year 16 days7.75%1 year 17 days - 2 Years7.75%2 years 1day - 2 Years 15 days7.60%2 Years 16 days7.60%2 years 17 days - 3 Years7.60%3 years 1day - 5 years7.60%5 Years 1 Day - 8 Years6.50%8 Years 1 Day - 10 Years6.50%(Source: hdfcbank.com)ICICI BankTermInterest rate offered to senior citizen(with effect from August 14, 2018)7 days to 14 days4.50%15 days to 29 days4.75%30 days to 45 days6%46 days to 60 days6.25%61 days to 90 days6.50%91 days to 120 days6.50%121 days to 184 days6.50%185 days to 289 days7%290 days to less than 1 year7.25%1 year to 389 days7.25%390 days to 2 years7.50%2 years 1 day upto 5 years7.75%5 years 1 day upto 10 years7.50%5 Years Tax saver FD (max.
up to Rs 1.50 lakh)7.75%(Source: icicibank.com)India PostTermInterest rate offered to senior citizen1 year6.60%2 year6.70%3 year6.90%5 year7.40%(Source: indiapost.gov.in)According to income tax laws, interest income up to Rs 50,000 in a year from a fixed deposit earned by the senior citizen on a saving deposits or fixed deposit is eligible for deduction of taxable income.WhileSection 80TTB of the Income Tax Act states that such income is eligible for income tax deduction,Section 194A mandates thatno tax will be deducted at source (TDS).
That means senior citizens can enjoy income up to Rs 50,000 a year in the form of interest from a savings account or fixed deposit without having to bear any income tax.
This is applicable on savings and fixed deposit accounts in a commercial bank, post office or co-operative bank, according to the taxman.