Being low-danger though delivering assured returns, fixed deposits have been very well-liked in India, specially with senior citizens. Investing in FDs guarantees interest on a month-to-month, quarterly, or annual basis. However, with the Reserve Bank of India (RBI) maintaining the important repo price unchanged at a 4% low for more than a year now, most banks have decreased interest prices on FDs.
Also, considering that FD returns are totally taxable as per the earnings tax slab of the investor, it additional reduces the actual price of returns. Accounting for inflation, post-tax FD returns may well basically be unfavorable. This has left quite a few senior citizen investors confused on regardless of whether to rely on FDs for a typical earnings in managing costs.
Tax-saving FDs, on the other hand, are fixed deposits that come with a lock-in period of 5 years and provide tax deduction on your investments below Section 80C of the Income Tax Act. Senior citizen investors can claim a deduction of up to Rs 1.5 lakh a year for their investments in these tax-saving fixed deposits. It is an outstanding investment selection for senior citizens as most banks provide an added .5% interest price to them. However, do retain in thoughts that premature withdrawals are not permitted due to the fact of the lock-in period, according to BankBazaar.
A senior citizen can open a tax-saving FD account in a ‘single’ or ‘joint’ mode of holding. That getting mentioned, it is crucial to note that only the 1st holder can claim the tax deduction positive aspects in case of a tax-saving FD opened in a ‘joint’ mode of holding.
Generally, TDS is applicable on the FD returns as per the investor’s slab price. However, senior citizens can submit Form 15H (Form 15G for non-senior-citizen depositors) to the bank to steer clear of TDS. Senior citizens are also eligible to avail a tax deduction of Rs. 50,000 on the interest earnings from deposits below Section 80TTB of the I-T Act, based on terms and circumstances.
So, if you are a senior citizen and want to invest in a tax-saving FD, right here are the present interest prices getting supplied by some of the major public, private and modest finance banks in the nation.
The table also offers the indicative corpus for every single of the bank’s provides on an investment of Rs 1.5 lakh for 5 years assuming quarterly compounding of interest. Before investing, even so, do get clarity on all the related terms and circumstances just before finalizing any investment choice.
INTEREST ON TAX-SAVING FDS (FOR SENIOR CITIZENS)
Disclaimer: Data as on respective banks’ sites on September 14, 2021. Interest prices of all listed (BSE) public, private and modest finance Indian banks have been regarded for information compilation. Banks for which information is not readily obtainable on their sites have not been regarded. The table incorporates only tax-saving FDs for senior citizens (excluding super senior citizens) for 5-year tenure. *Assuming quarterly compounding of interest for all the banks.
Data compiled by BankBazaar.com, an on the net marketplace for loans, credit cards and more.