FD interest rates for senior citizens

How Senior Citizens Can Avoid 10% TDS On Fixed Deposit

Banks and Non-Banking Financial companies deduct TDS from Fixed Deposit accounts at a rate of 10 percent if account holder PAN details are submitted and interest generated in FDs exceed Rs 40,000 in a year. Without a PAN or Forms 15G and 15H, the bank will deduct TDS at 20 percent. A limit of Rs 50,000 from FD interest rates for senior citizens in a year for seniors aged 60 and above. 

Invest in Tax Saving FD for Senior Citizen

You will love earning high interest on your investments and saving money on your taxes. Senior citizens often favor investing in financial products with higher interest rates and tax savings. Senior citizens can benefit from a tax-saving fixed deposits scheme with high FD interest rates for senior citizens, which offers low risk and various investment options. 

A tax-saving FD is a financial instrument that guarantees capital safety while also ensuring decent appreciation over time. There is a tendency for senior citizens to park their money in tax-saving FDs with high FD interest rates for senior citizens, to avoid sudden depreciation due to the changing market conditions. The benefit of FDs for seniors is that they can generate income regularly. 

Several banks are offering lucrative deals on their savings to seniors. To help seniors reduce their overall tax liabilities, they provide higher FD interest rates for senior citizens on tax-saving FDs to help them save money for their retirement. Tax-saving FDs are ideal for seniors looking for high FD interest rates for senior citizens. 

Under Section 80C of the Income Tax Act, 1961, senior citizens can save by investing in tax-saving FDs. In this case, they are eligible for a tax exemption of up to Rs 1.5 lakhs. However, the FDs are typically locked into five years and cannot be withdrawn. 

There are 0.50% high FD interest rates for senior citizens on tax-saving FD. The majority of banks offer higher interest rates to senior citizens. Joint accounts are available in many tax-saving FD schemes, but only the primary account holder gets tax benefits.

Benefits of Investing in Tax Saving FD

 Designed specifically for senior citizens 

Several retirement funds are specifically designed for senior citizens to meet their investment needs. You can invest in a senior citizen FD account if you are over 60.

 Tax saving 

Under section 80C of the Income Tax Act, 1961, one can claim up to Rs 1.5 lakh deductions in a financial year. A tax saver FD can be claimed, but not any other type of senior citizen FD. 

Maximize your idle funds’ earnings 

Seniors can earn additional income by investing in tax-saving FDs using their idle funds. There are also higher FD interest rates for senior citizens earned by tax-saving FDs than savings accounts and recurring deposits. 

Lock-in period 

In comparison to regular FDs, these FDs have several differences. First, the lock-in period for these tax-saving FDs is five years. By implementing this clause, you will be able to ensure that your investments are disciplined. In contrast, a Tax Saver FD cannot be prematurely withdrawn, which entails a penalty for premature closure.

 Tax on interest earned 

Income tax is imposed on interest income earned from tax saver FDs. As a result, such banks’ interest amount is subject to TDS deductions. However, if a senior citizen submits Form 15H to the bank, they can avoid or minimize TDS simultaneously.

Final Thoughts

Fixed deposits are the most popular investment choices among senior citizens. However, it is also possible to invest in tax-saving FDs if the senior citizen’s income is tax liable. Using the FD return calculator, senior citizens can also evaluate the tax-saving FD maturity amount in advance. 

When booking a tax-saving FD, a senior citizen can collect interest income as per their requirements, either monthly or quarterly. Senior citizens can use the payout to pay for their daily household expenses if they invest significantly in these FDs.

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