Why Senior Citizen Investors Can Opt For Tax-Saving FDs; Read To Know More – News18

The most preferred investment option among senior citizens in India is tax-saving fixed deposits (FDs). Under section 80C of the Income Tax Act of 1961, investors who have invested in tax-saving FDs are allowed to claim income tax deductions. Fixed returns are safer options, compared to other investment options like equity. Tax benefits have made them popular among risk-averse investors. The tax-saver FDs have a lock-in period of five years, and the bank doesn’t allow premature withdrawals in these deposits. Senior citizens are required to pay taxes annually after retirement. It is important to reduce tax liability and identify tax-saving strategies. Senior citizens are offered slightly higher interest rates on tax-saver FDs than the traditional deposits, which differ depending on the bank. HDFC, ICICI and State Bank of India are offering interest rates at 7.5%. Punjab National Bank is giving 7%, while Yes Bank’s interest rate on tax-saving FDs is the highest at 7.75%.

Anyone aged 60 or above is eligible to open a senior citizen tax-saver FD. The interest payment can be made monthly, quarterly or half-yearly, or annually. They can even go for cumulative FD, where accrued interest is paid at the time of maturity. Senior citizen investors also have the option to reinvest the interest, along with the principal amount.

Under section 80TTB of the Income-Tax Act, senior citizens can deduct up to Rs 50,000 from the total interest earned on fixed deposits within a fiscal year. Banks would charge tax deducted at source (TDS) on this if the income amount of interest credited in a financial year exceeds more than Rs 50,000. Under section 194A of the Income-tax Act, TDS has currently been reduced by 10%.

Senior Citizens can claim their tax exemption under the interest earned in their FDs by using Form 15 H.