Senior Citizen FD Rates

Senior citizens usually look for safe investment avenues that help them protect their capital and give them a guaranteed income. This is where senior citizen fixed deposits come into the picture. Senior citizen fixed deposit schemes are deposit schemes that give a fixed rate of interest on your investments. Thus, for senior citizens, fixed deposit schemes prove to be an attractive investment avenue because they provide the safety of investments and guaranteed returns.

Senior citizen fixed deposits are offered by banks and non-banking finance companies (NBFCs). All deposit schemes have different rates of interest depending on the amount of deposit and tenure. Here are the top senior citizen fixed deposit schemes which have the best interest rates - (As on 8-Oct-2020)

The senior citizens are usually offered a higher rate of interest for FD of about 0.25% or 0.50% over the regular deposit rates. The features of senior citizen fixed deposits are as follows -

• Deposits can be taken from banks or non-banking finance companies

• The tenure of the deposit ranges from 7 months to up to 10 years

• You can invest in senior citizen fixed deposit schemes online or offline

• The minimum amount of investment starts from Rs.100 and there is no limit on the maximum amount of deposit

The benefits of senior citizen fixed deposits are many. These include the following -

• Guaranteed returns are offered on their deposits

• There is no fear of capital erosion since your deposit is safe from market volatility

• If you choose 5-year tax-saving fixed deposit schemes offered by banks, the amount deposited is allowed as a deduction from your taxable income. You can enjoy a deduction of up to Rs.1.5 lakhs under Section 80C of the Income Tax Act, 1961

• Interest earned from your deposits qualify as a tax-free income up to Rs.50, 000 under Section 80 TTB of the Income Tax Act, 1961

• If you choose bank fixed deposits, deposits up to Rs.5 lakhs would be insured even if the bank winds up its operations

• The interest earned on senior citizen fixed deposit schemes can be availed as incomes as and when they are calculated. Fixed deposits allow interest payments monthly, quarterly, half-yearly, or annually as and when they are earned. Through this earning senior citizens can create a source of income through fixed deposit investments

If the interest earned from a senior citizen fixed deposit scheme exceeds ₹50, 000 in a financial year, the bank or financial institution deducts a TDS of 10% from the interest income. If, however, a senior citizen does not fall into the tax bracket and the interest earnings are not taxable, he/she can submit Form 15H to the bank or financial institution and avoid TDS deduction from earned interest.

Form 15H should be submitted to all banks and financial institutions with which the senior citizen holds a deposit. However, for multiple deposits with one bank or financial institution, a single Form 15H can be submitted wherein all deposits can be mentioned.

Senior citizen fixed deposits are for a fixed period of investment. However, if you want, you can withdraw the deposit prematurely before the investment period is over. This is called the premature withdrawal of fixed deposits.

Premature withdrawals are allowed by all fixed deposit schemes. However, on such withdrawals, a penalty is levied which might range from 0.5% to 2% depending on the bank or financial institution. Some institutions allow premature withdrawals after a specific lock-in period which might range from 6 months to a year. In the case of 5-year tax-saving fixed deposit schemes, however, premature withdrawals are not allowed. You have to stay invested in these schemes for the chosen duration of 5 years.

To invest in a senior citizen fixed deposit scheme, the following criteria should be fulfilled -

• The individual should be aged 60 years and above

• The minimum amount of deposit should be paid to open the account. This minimum amount can start from Rs.100 depending on the financial institution offering the deposit

• Both resident Indians and NRIs can opt for a senior citizen fixed deposit scheme

To open the senior citizen fixed deposit account, the following documents would be needed -

• Fixed deposit account opening form, filled and signed

• Photo identity proof of the depositor which can be Voter's ID Card, Aadhaar Card, PAN Card, driving license, passport, etc.

• Age proof of the depositor which can be Voter's ID Card, Aadhaar Card, PAN Card, driving license, passport, etc.

• Address proof of the depositor which can be Voter's ID Card, Aadhaar Card, driving license, passport, utility bills, rent agreement, property deeds, etc.

• PAN Card or Form 60

• Aadhaar Card