FD Interest Rates: Tax saving FD rates for senior citizens: These banks offer up to 7%

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Tax-saving bank fixed deposits (FDs) come with a fixed tenure of 5 years. Tax-saving bank FDs have a fixed interest rate and guaranteed returns throughout the term.

For senior citizens, the bank FD is one of the most popular financial tools to invest their money. They choose to put a big portion of their money into bank FDs because the principal investment amount is safer than equity investments, and the former also provides a guaranteed return in the form of interest income.

Individuals over the age of 60 (seniors) can earn an extra 0.25 percent to 0.65 percent interest rate over standard FD rates. Although interest rates have historically been low, the situation is gradually improving, with some banks lately announcing increases in their FD rates.

Tax saving FD rates for senior citizens

Tax benefit on 5 year FD for senior citizen

Section 80C of the Income-tax Act,1961 allows for a deduction of up to Rs 1.5 lakh in a single financial year. Interest received on deposits kept with banks, co-operative banks, or post offices is virtually tax-exempt under the recently inserted section 80TTB of the Income Tax Act. The following is how the tax exemption works: A senior citizen can claim deduction of up to Rs 50,000 interest income obtained from these entities as deduction from gross total income before levy of tax.

Furthermore, no TDS will be deducted from interest payments up to Rs 50,000 made in a single financial year. A senior citizen can submit Form-15H to the bank to prevent TDS deduction.

Nomination facility

Nomination facility for FDs is also available. While placing an FD, it is important that you mention the nominee in a clear and precise manner so that your legal heirs do not have to go through difficulties to claim the money. When submitting a nomination, a separate form known as Form DA1 must be completed.

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