In 2025, the Government of India introduced a new fixed deposit (FD) scheme specifically tailored for senior citizens. Aimed at providing secure income and steady returns, the plan offers enhanced interest rates, flexible payout options, and tax benefits. With full government backing, this FD plan is designed to offer peace of mind to retirees and senior investors looking for low-risk avenues.
Government Launches New Senior Citizen FD Plan 2025
| Aspect | Details |
|---|---|
| Interest Rate | 8.2 % per annum (fixed) |
| Tenure | 5 years (lock-in) |
| Minimum Deposit | ₹1,000 |
| Maximum Deposit | ₹30 lakh per person |
| Payout Options | Monthly, quarterly, half-yearly, or at maturity |
| Tax Incentive | Deduction up to ₹1.5 lakh under Section 80C; TDS applicable above ₹1 lakh interest |
| Safety | Fully backed by Government of India |
Scheme Details
Who Can Apply
Any Indian resident aged 60 years or above is eligible to invest in the scheme. Super senior citizens, aged 80 and above, may receive additional tax benefits. Early retirees between ages 55 and 60 can also qualify if they have retired under applicable rules.
Interest Rate and Payment Structure
The plan offers a fixed interest rate of 8.2 % per annum. Interest is compounded and credited quarterly. This rate remains unchanged for the July to September 2025 quarter, providing financial stability even during fluctuating monetary policy conditions.
Tenure and Deposit Limits
The scheme has a lock-in period of 5 years. The minimum deposit amount is ₹1,000, and the maximum is ₹30 lakh per individual. Joint accounts are allowed but only with a spouse. The primary account holder must meet the age eligibility.
Interest Payout Options
Investors can choose how they want their interest to be paid:
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Monthly
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Quarterly
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Half-yearly
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Lump sum at maturity
The flexibility in interest payout allows retirees to align returns with their monthly budgeting needs.
Taxation and Deductions
Investments under this FD plan qualify for tax deductions up to ₹1.5 lakh under Section 80C of the Income Tax Act. However, the interest earned is taxable based on the investor’s tax slab. Tax Deducted at Source (TDS) applies if interest income exceeds ₹1 lakh in a financial year. To avoid TDS, eligible individuals can submit Form 15H if their total income is below the taxable limit.
Key Features and Advantages
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Fully guaranteed by the Government of India
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Attractive fixed rate (8.2 %) compared to most public sector bank FDs
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Suitable for risk-averse senior citizens
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Option for early withdrawal under specific conditions
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Payout flexibility supports retirement cash flow planning
Comparison with Bank FDs
While some small finance banks are offering interest rates as high as 9.1 % for senior citizen FDs, those come with higher risk and lower insurance limits (₹5 lakh per bank under DICGC). Public sector banks are offering rates around 7.5–7.95 %, still below the 8.2 % offered in this government-backed scheme. For those prioritizing capital safety, the new plan offers a solid blend of return and security.
FAQs
Who is eligible for the government senior citizen FD?
All Indian residents aged 60 years and above are eligible. Early retirees between 55 and 60 may also apply under special rules.
What is the interest rate under the scheme?
A fixed interest rate of 8.2 % per annum, compounded quarterly.
What is the tenure of the scheme?
The scheme has a fixed tenure of 5 years with a lock-in period.
What is the minimum and maximum investment?
The minimum deposit is ₹1,000 and the maximum allowed is ₹30 lakh per person.
Are there any tax benefits?
Yes. Up to ₹1.5 lakh invested in the scheme qualifies for tax deduction under Section 80C. Interest earned is taxable and subject to TDS if it exceeds ₹1 lakh per year.
Can the interest be paid monthly?
Yes, investors can opt for monthly, quarterly, half-yearly, or lump sum payout options.
Is premature withdrawal allowed?
Yes, but it is subject to penalty charges and specific conditions depending on how long the deposit has been held.
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