Everyone loves earning higher interest on one’s investments and when it comes to tax-saving options it is like the cherry on the cake. Senior citizens often prefer investing in such financial products where they can save tax and get higher interest rates. Tax-saving fixed deposits (FDs) for senior citizens are one such option where risk is low and there is flexibility to choose investment tenures.
Tax-saving FDs promise capital safety and ensure decent appreciation over the investment tenure. Senior citizens prefer to park their money in tax-saving FDs to avoid sudden depreciation owing to changing market scenarios. FDs help senior citizens generate regular income.
In the past, the interest rates have been low but recently many banks have increased their interest rates on FDs for senior citizens who earn higher interest rates than others.
Read More:-After SBI and HDFC, ICICI revises interest rates on fixed deposits, check latest FD rates
Banks offer lucrative deals to senior citizens on their savings. They offer a higher rate of interest on tax-saving FDs to senior citizens to help them reduce their overall tax liabilities. Senior citizens who are looking to receive higher interest on their deposits along with tax-saving options must go for tax-saving FDs.
By investing in tax-saving FDs, senior citizens can also save tax under Section 80C of the Income Tax Act, 1961. They can avail a tax exemption of a maximum of Rs 1.5 lakh. But these FDs have a 5-year lock-in period and premature withdrawals and loans against the FDs are often not allowed, according to Bankbazaar.
Senior citizens can earn 0.50% higher interest rates on tax-saving FDs. Almost all banks offer more interest to their senior citizen customers. Many tax-saving FD schemes give an option of joint accounts but only the primary account holder can get tax benefits.
Read More:-SBI Increases Interest Rates of These Fixed Deposit Tenures; Check Latest FD Rates
However, TDS is applicable on FD returns as per the investor’s slab rate. Senior citizens can avoid this by submitting Form 15H (Form 15G for non-senior-citizen depositors) to the bank. They can also avail additional tax deduction of Rs 50,000 on the interest income from deposits under the newly-added Section 80TTB of the I-T Act.
One of the most important things senior citizens should remember is to make a comparison of interest rates. They may vary from bank to bank. It is advisable to check which bank offers you a good deal on ongoing interest rates.
If you are a senior citizen and planning to invest in tax-saving FDs, then the table below offers the current interest rates by some prominent banks. This table also highlights the indicative amount for each of the banks’ offers on an investment of Rs 1.5 lakh for five years assuming quarterly compounding of interest. Also, you must have complete clarity on all the terms and conditions before making a final decision.
INTEREST ON TAX SAVING FDs FOR SENIOR CITIZENS
Data as on respective banks’ website on 15 Mar 2022;
Interest rate of all listed (BSE) Public & Pvt Indian Banks considered for data compilation. Banks for which data is not available on their website are not considered. Table includes only Tax Saving FDs for Senior citizens (excluding super senior citizens) for 5-Year tenure. *Assuming quarterly compounding of interest for all the bank;
