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Know About Fixed Deposit Interest Rates For Senior Citizens In Post Office

The Union Budget of 2021 announced a lot of changes in the way taxes and schemes operate. To make the most of these changes, it is essential to analyze them. For instance, it exempts senior citizens from filing tax returns if their only source of income is pension and interest received on that account. 

Similarly, many amendments were made for tax benefits on interest earned from post office FD schemes. This opens up a lot of avenues for managing wealth and getting the best possible returns. But to make the most of it, let us start by familiarising ourselves with the FD scheme offered by the Post Office.

What is a Post Office Fixed Deposit?

Any eligible individual can open a post office fixed deposit account. Only residents and no NRIs are included in this. The Indian Postal Services has provided this opportunity. Like any other fixed deposit, the account holder deposits the amount for a fixed period over which interest is earned on the principal amount. This sum can be deposited through cash or cheque. 

Being a scheme that comes from a trusted source, it is highly reliable. The guaranteed flow of income from high rates of interest makes it very attractive. If you are nearing your retirement, this is a must to ensure a stress-free post-retirement period. Talking about the ease and convenience of investing, another group that the scheme suits are senior citizens.

Senior Citizen Savings Scheme by the Post Office

Post offices (along with other banks) offer the Senior Citizen Savings Scheme (SCSS). Under this scheme, any individual over the age of 60 can make a deposit. You are also eligible if you are over the age of 50 and have opted for VRS. Similarly, defense personnel in the age bracket of 55-60 years may also take benefit of SCSS.

The post office provides interest at 7.4% per annum on the amount invested. The maximum period of maturity is 5 years. The minimum investment is Rs. 1000. Further investment can be done up to Rs. 15 lakh in multiples of 1000. 

Benefits of Post Office Fixed Deposit for senior citizens

Steady and guaranteed income:

The senior citizen fixed deposit scheme provides a steady stream of interest income. It is a low-risk investment and thus suitable for senior citizens.

Simple process:

For senior citizens, investing in this scheme proves to be beneficial as it is quick and easy. Applying for the senior citizen fixed deposit scheme can be done via both online and offline modes. All you need is a minimum investment of Rs. 1000. There is no maximum limit for this purpose. 


The scheme allows for premature withdrawal of funds. This ensures liquidity in the hands of the account holder. However, this can only be done after 6 months from the opening of the account.


The senior citizen fixed deposit scheme at the post offices lets you choose a nominee. The nominee is someone to whom the benefits are transferred at the demise of the primary account holder. 

High returns:

The post office fixed deposit scheme offers higher returns than many of its alternatives. The rate of interest depends on the time duration for which the investment is made. These are revised every quarter. These may be higher than rates provided by many banks on their FDs.

Interest rates for senior citizens

The quarterly interest rates for senior citizens are the same as for any other individual. The rates for the second quarter of the financial year 2021-22 are as follows:




1 year


2 years


3 years

5 years


Tax benefits for senior citizens

With effect from 1st April 2018, interest received on deposits with Post Office by senior citizens is exempt from tax up to Rs. 50,000. This provision comes under the purview of Section 80TTB of the Income Tax Act.

Moreover, a deduction up to Rs 1.5 lakh can be claimed under section 80C for the amount invested in the Post Office Fixed Deposit.

Thus, not only does this scheme provide a great investment opportunity with high returns, but it also helps you manage your tax liability. 

To conclude

After analyzing the senior citizen FD rates, features, and benefits, we can deduce that it is a great investment opportunity. It provides flexibility by which you can choose the amount and duration of your investment. The simplicity and guaranteed high returns make the scheme a favorite for senior (in age, if not experience) investors. 

So do read up on the benefits and features of this scheme. Get set to manage some wealth in your golden years. 

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