Senior Citizens Alert! THESE banks offering 7.25% interest rate

Fixed deposits are often considered the best kind of investment, given the low-risk but guaranteed returns. Customers need to invest in FDs on a monthly, quarterly or annual basis. 

With RBI keeping the repo rate unchanged at 4%, almost every bank is offering less interest rates on FDs.

Besides that, FD returns are totally taxable according to the income tax slab of the investor, which means that the actual rate of returns is further reduced. This also means that the accounting for inflation, post-tax FD returns may turn out to be negative. This has created confusion in the minds of senior citizen investors on how to depend on FDs for a regular income.

Tax-saving FDs basically come with a lock-in period of 5 years and offert deduction of tax on your investments under Section 80C of the Income Tax Act. A deduction of up to Rs 1.5 lakh can be claimed by senior citizen investors in tax saving fixed deposits.

It offers 0.5% interest rate to the FDs. However, do keep in mind that premature withdrawals are not allowed because of the lock-in period, according to BankBazaar.

FD account can be opened in single or joint mode of holding and notably, the first holder can get the tax deduction benefits when it comes to a tax saving FD opened in a ‘joint’ mode of holding.

In general, FD returns attract TDS as per the investor’s slab rate. But there is one more way out. Senior citizens can further submit Form 15H (Form 15G for non-senior-citizen depositors) to the bank so that they don’t have to pay TDS. 

Senior citizens can also get a tax deduction of Rs. 50,000 on the interest income from deposits under Section 80TTB of the I-T Act, depending on terms and conditions.