Fixed deposit schemes are quite popular among the young and old alike. These investment avenues provide the safety of invested capital, guaranteed returns, no investment risks or risk of market volatility and a stable corpus at the end of the tenure. Thus, individuals looking to avail fixed returns over a specified period of time opt for fixed-deposit fd-interest-rates fixed deposit schemes.
Fixed deposit schemes are offered by banks, non-banking financial companies and also post offices. You can apply with any financial institution and the features of the scheme would be the same. Moreover, if you are a senior citizen, you can avail additional benefits from investing in a fixed deposit scheme. Do you know what these benefits are?
Let’s find out –
• Increased interest rates
Every financial institution offers an increased rate of interest on fixed deposit schemes for senior citizens. These rates are 0.25% to 0.5% higher than the normal deposit rates offered to individuals who are below 60 years of age. For instance, if the rate of interest on a fixed deposit scheme is 7% for normal individuals (individuals below 60 years of age), for senior citizens the same deposit would offer an interest rate of 7.5% for the same deposit tenure. That is why many investors opt to invest in fixed deposit schemes in the name of their parents to avail of higher interest rates. Even senior citizens choose fixed deposits to be the preferred mode of investment for the returns that they promise.
• Safety of investments
Senior citizens cannot risk their life savings in risky investment avenues prone to market risks, which might give negative returns. That is why fixed deposit schemes are the ideal investment tools for them so that they can protect their retirement corpus while at the same time earning good returns on it.
• Tax benefit on investments
Under the provisions of Section 80C, if senior citizens, as well as other tax payers, choose to invest in five year fixed deposit schemes offered by banks or post offices, the investment that they make would be allowed as a tax-free deduction. This deduction can be claimed for investments of up to INR 1.5 lakhs and is available for all types of taxpayers. Thus, senior citizens can save on their tax liability by choosing to invest in 5-year fixed deposit schemes.
• Tax benefit on interest earned
As per the provisions of Section 80TTB, the interest earned by senior citizens on their bank or post office deposits would be allowed as a tax-free income. Senior citizens can earn a tax-free income of up to INR 50,000 from the interest earned on their fixed deposit schemes. This benefit is applicable only for senior citizens while normal individuals get their interest earnings taxed at their income tax slab rates.
• No TDS deductions on interest income
Besides availing tax-free returns under Section 80TTB, the interest income of senior citizens would also be exempt from TDS deductions if such interest income is below INR 50,000.
Senior citizens can also choose to avail the interest earned on their deposits periodically if they want a source of income. So, given these benefits provided by fixed deposit schemes, such schemes become the ideal investment avenues for senior citizens.