Senior Citizen Savings Scheme vs bank FDs for senior citizens: Updated interest rates, tax benefits

Top Highlights 

* Since the Reserve Bank of India raised its repo rate to 6.5 per cent earlier this month, most top banks have revised their fixed deposit (FD) rates in a bid to offer competitive rates. 
* In comparison, post office deposit schemes are also offering attractive and competitive rates.  
* The Senior Citizen Savings Scheme offers an interest rate of 8 per cent per annum. 
 

Bank FD vs Senior Citizen Savings Scheme: When it comes to safe investment bets, fixed deposits are still the most preferred option for Indians. Since the Reserve Bank of India raised its repo rate to 6.5 per cent earlier this month, most top banks revised their fixed deposit (FD) rates in a bid to offer competitive rates as compared to other saving tools.  

Top banks like HDFC Bank, State Bank of India, Punjab National Bank, and Kotak Mahindra Bank all have revised their rates and are offering attractive rates, especially for senior citizens. Fixed deposits for senior citizens offer special interest rates over and above the interest rates offered to general investors. Senior citizens are offered a wide range of benefits under FD schemes, besides the additional 0.50 per cent interest rate that most banks offer. 

In comparison, post office deposit schemes are also offering attractive and competitive rates. Recently while reading out the Budget 2023, Finance Minister Nirmala Sitharaman announced that senior citizens can now invest Rs 30 lakh instead of Rs 15 lakh in the Senior Citizens Savings Scheme (SCSS).  

Here’s a quick comparison of FD rates and SCSS rates. 

Senior Citizens Savings Scheme 

The Senior Citizens Savings Scheme is especially for investors above the age of 60 years. The government reviews small savings interest rates every quarter.  

In the last rate revision, the government increased the Senior Citizen Savings Scheme (SCSS) for the January-March quarter of FY2022-23 to 8 per cent per annum. 

The upper limit of the scheme till March 31, 2023, is Rs 15 lakh. So, if someone invests Rs 15 lakh now, the annual interest income will be Rs 1.2 lakh. As the scheme is for five years, the investors are assured to get Rs 1.2 lakh X 5 = Rs 6 lakh. The 5-year tenure of the account can be extended for another 3 years.  

The interest rate is compounded every quarter or year and payable at the time of maturity with the principal. The interest is paid on the last day of every quarter on March 31, June 30, September 30, and December 31.  

Besides this, SCSS has a tax benefit. Senior citizens can get an income tax deduction of up to Rs 1.5 lakh under Section 80C of the Indian Tax Act, 1961.  

Bank FDs 

When it comes to bank fixed deposit schemes, senior citizens have more options in terms of tenure in comparison to SCSS. FD schemes range from 7 days to 10 years, and investors can put their money as per their short-term or long-term goals. Senior citizens always get 50 basis points (bps) extra on these deposits. 

Let’s see the interest rates for FD schemes for 3 years to 10 years

Bank	Tenure	FD rates for general investors	FD rates for senior citizens
State Bank of India (SBI)	3 years to less than 5 years	6.50%	7.00%
State Bank of India (SBI)	5 years and up to 10 years	6.50%	7.50%
State Bank of India (SBI)	400 days (Amrit Kalash)	7.10%	7.60%
Punjab National Bank (PNB)	Above 3 years & up to 5 years	6.50%	7.00%/ 7.30% (Super senior citizens)
Punjab National Bank (PNB)	Above 5 years & up to 10 years	6.50%	7.30%/ 7.30% (Super senior citizens)
Punjab National Bank (PNB)	PNB Uttam (3-5 years)  5-10 years	6.55%	7.05%/7.35% (Super senior citizens)
Bank of Baroda (BoB)	Above 3 Years and up to 5 Years	6.25%	6.90%
Bank of Baroda (BoB)	Above 5 Years and up to 10 Years	6.25%	7.25%
Bank of Baroda (BoB)	444 Days (Baroda Tiranga Deposit Scheme)	6.75%	7.25%
Bank of Baroda (BoB)	555 Days (Baroda Tiranga Deposit Scheme)	6.75%	7.25%
Bank of Baroda (BoB)	399 Days (Baroda Tiranga Plus Deposit Scheme)	7.05%	7.55%
HDFC Bank	3 years 1 day to - 5 years	7.00%	7.50%
HDFC Bank	5 years 1 day - 10 years	7.00%	7.75%
ICICI Bank	3 years 1 day to 5 years	7.00%	7.50%
ICICI Bank	5 years 1 day to 10 years	6.90%	7.50%

Also read: SBI Fixed Deposit schemes: SBI introduces 400-day tenure scheme, hikes rates on FD schemes below Rs 2 cr

Also read: Budget 2023: Mahila Samman Saving Certificate vs other small savings schemes

Also read: NSC, SCSS, Monthly Income Scheme: Check revised interest rates on these small savings schemes for Jan-Mar