Features,Taxes, Benefits Of Senior Citizen Fixed Deposits

Features of Senior Citizen Fixed Deposit

• The features of the senior citizen fixed deposits remain the same as regular term deposits. Some of these features are listed below.

• These fixed deposits also offer deposit tenures ranging from 7 days to 10 years depending on the bank.

• Nomination facilities are also available on these deposits where depositors can declare a person.

• The interest rates offered under these schemes are decided based on the duration of the term deposit.

• The interest earned is compounded on a quarterly basis and can be credited to an account or added to the maturity value of the FD.

• Once created, the fixed deposit can be closed prematurely at any time. Such a premature withdrawal is not possible with tax saver FDs and may attract penalties with regular FD based on the bank's rules.

• The limits for the amounts that can be deposited under these schemes can range from Rs. 1 crore to higher amounts. These limits will be decided by banks and may vary from one bank to the next.

• Some of these deposits can even be tax saver fixed deposits which come with lock in periods of 5 years and still offer the special interest rates to senior.

Taxes on Senior Citizen FDs

• The interest earned on senior citizen fixed deposits may be liable for income tax based on the applicable laws. These taxes, if any, are deducted at the source however, in case you are not liable to pay taxes you can submit forms 15G or 15H to the banks.

• If the term deposit is an NRE deposit then it may not be liable for taxes however in the case of NRO and FCNR deposits interest earned may be liable for taxes.

Benefits of FD for Senior Citizen

• There are a multitude of benefits that can be gained from opening senior citizen fixed deposits, chief among which are:.

• They offer special interest rates which tend to be higher, thereby resulting in more earnings.

• It creates a safe space for the money to grow in at a steady pace.

• The interest earned on these deposits can be turned into monthly incomes thus providing more peace in your retirement years.

• The senior citizen fixed deposit can also be a tax saver deposit which help get tax deductions under section 80C of the IT Act.

• Senior citizens can choose different interest payout options where interest is credited to the depositors savings account on a frequent basis - either monthly, quarterly, half-yearly or yearly.

• Regular interest payout option can be a boon for those who are retired because it acts as a source of supplementary income