What is Section 80TTB and how does it benefit Indian Senior Citizens investing in FDs?

Section 80TTB of the Income Tax Act allows resident senior citizens (aged 60+) to deduct up to ₹50,000 of interest income earned from bank fixed deposits, recurring deposits, and post office time deposits. In addition, no TDS is deducted under Section 194A by banks if annual interest remains under ₹50,000.

How does DICGC insurance protect bank fixed deposits in India?

The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, insures all deposits up to a statutory maximum of ₹5,00,000 (Rupees Five Lakhs) for both principal and interest per depositor per bank in the same capacity. This covers Public Sector, Private, and Scheduled Small Finance Banks.

Why do Small Finance Banks offer up to 9.0% - 9.5% on Senior Citizen FDs?

Small Finance Banks offer higher interest rates to mobilize retail liability funding for local credit operations. As RBI Scheduled Commercial Banks, their deposits enjoy identical ₹5 Lakh DICGC insurance as large PSU banks like SBI.

How can senior citizens prevent 10% TDS deduction using Form 15H?

Resident senior citizens whose estimated total income results in zero tax liability can submit Form 15H at the beginning of the financial year. Once accepted with a valid PAN, the bank is legally barred from deducting TDS.

What is the difference between Corporate Fixed Deposits and Bank FDs?

Bank FDs are covered by DICGC insurance up to ₹5 Lakhs. Corporate FDs (issued by NBFCs like Bajaj Finance) are not covered by DICGC and rely purely on credit ratings from agencies like CRISIL/ICRA.

Back to YIELDNEST.ONLINE Portal

100% Sovereign Guarantee (RBI)

RBI Retail Sovereign Debt

RBI Floating Rate Savings Bonds (FRSB 2020): 8.05% Sovereign Yield

RBI Floating Rate Savings Bonds (Taxable), 2020 are sovereign debt instruments issued by the Reserve Bank of India on behalf of the Government of India. They carry a coupon rate of 8.05% (reset semi-annually), payable every 6 months on 1st January and 1st July. There is no upper limit on the investment amount.

Current Rate8.05%Reset every 6 mos

Spread Over NSC+35 bpsStatutory formula

Lock-In Tenure7 YearsSeniors exit early

Maximum LimitNo CapInvest any amount

Senior Citizen Premature Redemption Window & Penalty Rules

While non-senior citizens must remain locked in for the full 7-year term, the RBI Gazette Notification explicitly grants senior citizens early exit privileges based on age tiers:

Age 60 to 70 Years

Eligible for premature redemption after 6 years from issuance date.

Age 70 to 80 Years

Eligible for premature redemption after 5 years from issuance date.

Age 80+ Years (Super Seniors)

Eligible for premature redemption after 4 years from issuance date.

Penalty Clause: Upon premature exit, a penalty equal to 50% of the interest due and payable for the last six months of the holding period is deducted.

Government Notification No. F.No.4(10)-B(W&M)/2020.Build a Mixed Retirement Portfolio with SCSS & RBI Bonds →