For seniors, the FD bank is one of the most popular financial tools to invest their money. They choose to place a large portion of their money in bank FDs because the primary investment amount is safer than equity investments, and the former also offers a guaranteed return in the form of interest income.
Persons over the age of 60 (seniors) can earn an additional interest rate of 0.25-0.65% over standard FD rates. Although interest rates have been historically low, the situation is gradually improving, with some banks recently announcing increases in their FD rates.
FD Tax Saving Rates for Senior Citizens
Tax advantage on DF 5 years for seniors
Section 80C of the Income Tax Act 1961 allows a deduction of up to Rs 1.5 lakh in a single financial year. Interest earned on deposits held with banks, co-operative banks or post offices is virtually tax exempt under the recently inserted Section 80TTB of the Income Tax Act. Here is how the tax exemption works: an elderly person can claim a deduction of up to Rs 50,000 interest income obtained from these entities as a deduction from the total gross income before tax deduction.
Moreover, no TDS will be deducted from interest payments up to Rs 50,000 made in a single financial year. A senior can submit Form 15H to the bank to prevent the TDS deduction.
Ease of appointment
Appointment function for FD is also available. When placing an FD, it is important that you mention the nominee clearly and precisely so that your legal heirs do not have to go through difficulties in claiming the money. When submitting an application, a separate form known as Form DA1 must be completed.