Before opening an FD account, fixed deposit investors, particularly senior citizens, should compare the interest rates offered by several banks. Here are 5 banks offering highest interest rates on 1-2 year fixed deposits.
Basic features of FD
• Market risks have no bearing on the returns on your fixed deposits.
• Your deposits are insured by the Reserve Bank of India (RBI) up to a limit of Rs. 5 lakh.
• You can borrow up to 90% of your deposit amount at low fixed deposit rates. It is around 2% greater than the FD rate of interest.
• In the event of an emergency, you can easily liquidate your FD and spend the money.
• You can have your FD interest credited to your account on a monthly, quarterly, or annual basis, depending on your needs.
TDS on Senior Citizen Fixed Deposit
Interest collected on deposits kept with banks, co-operative banks, or post offices is practically tax-free up to Rs 50,000, according to the recently inserted section 80TTB of the Income Tax Act.
If the interest from a senior citizen fixed deposit scheme reaches Rs 50,000 in a fiscal year, the bank or financial institution deducts a 10% TDS from the interest. However, if a senior citizen is not in a tax bracket and his or her interest earnings are not taxable, he or she can file Form 15H to the bank or financial institution to prevent TDS deduction on earned interest.