Senior Citizens typically prefer to park their money in risk-free financial products offering lucrative interest rates. Although there are several avenues to explore, fixed deposits (FDs) remain one of the preferred choices of senior citizens because FDs offer guaranteed returns without any financial risk. One of the concerns that senior citizens often have is tax planning. Without tax planning, your returns on any investment can go down the drain.
Tax-saving fixed deposits are a financial option that allows you to invest to save tax under Section 80C of the Income Tax Act. The minimum tenure for a term deposit under Tax Saving Scheme is five years. Senior citizens are offered a higher interest rate when they choose to park their money in an FD. Tax-saving FDs offer a higher interest rate to senior citizens and also help them save taxes.
Section 80C of the Income Tax Act allows you to claim a tax deduction of up to Rs 1.5 lakh if you put your money in the tax-saving FDs.
Tax-saving fixed deposits can be a good option if a senior citizen wants to save money. It would be best to remember that premature withdrawals in tax-saving FDs are not allowed as the scheme has a tenure range between 5 and 10 years. You can choose according to your financial goals.
It is advisable to open an FD account in a bank where you have your savings account. Still, you can choose any other financial institution where you are getting lucrative interest rates. At the maturity of your tax-saving FD, the amount gets transferred to your savings account.
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You can compare the interest rates of different financial institutions before opening a tax saving account. You must also see how much money you need to reach your financial goals. It is easy to calculate the total amount you will get at maturity. If you still have doubts about the tax saving and the matured amount, discuss them with your preferred financial institutions before opening an FD account.
Below are more than 30 financial institutions and their interest rates on tax-saving FDs. It helps you compare interest rates and show how a Rs 1.5-lakh FD will grow with different interest rates after five years. You can decide as per your financial requirements and expectations.
Note: Data as on respective banks’ website on 31 May 2022;
Interest rate of all listed (BSE) Public & Pvt Indian Banks considered for data compilation; Banks for which data is not available on their website are not considered. Table includes only Tax Saving FDs for Senior citizens (excluding super senior citizens) for 5-Year tenure. *Assuming quarterly compounding of interest for all the banks;
Compiled by BankBazaar.com