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

Special Fixed Deposits For Senior Citizens

Senior Citizen Fixed Deposits (FDs) are customized term deposit plans that allow those above 60 to get maximum returns out of their investment. All banks in India offer higher interest rates for this age group, making FDs a lucrative option. These types of deposits are referred to as senior citizen fixed deposits. There are a number of senior citizen fixed deposit schemes to choose from and they come with a wide range of features, including loan/overdraft facility, flexible tenures and interest payout options, among others.

These deposits are also used by senior citizens to park their excess money in a safe place where it can earn a decent interest and maybe even provide them an additional source of income. These deposits are almost the same as the regular fixed deposits. Possibly the main point on which they may differ from regular fixed deposits is when it comes to interest rates because many banks offer special interest rates to senior citizens. Another point on which they may differ from regular fixed deposits would be that to open a senior citizen fixed deposit, you will be required to submit proof of age.

Key features and benefits of senior citizen FDs:

• Attractive, higher interest rates
• Guaranteed returns
• Safe and secure investment
• Periodic interest payment option
• Online booking
• Premature withdrawal, nomination, loan and sweep-in facility

Senior Citizen Fixed Deposit Interest Rates

Many banks in India offer special fixed deposit accounts tailor made for senior citizens. A higher interest rate is paid on their fixed deposits which tend to be up to around 0.5% more than the average FD rate per annual.

Many banks in India are offering high interest rates on senior citizen fixed deposits. The interest rate ranges from 4.50% to 8%.

• The highest rate of interest on senior citizen FDs is being offered by IDFC Bank, which is 8% for a tenure of 366 days. For a time period of 367 days to 731 days, the rate of interest paid by IDFC is 7.75%.
• DCB Bank, Repco Bank and Lakshmi Vilas Bank also offer good interest rates that range from 7.35% to 7.75% for all deposits held for a time period that extends between 1 to 5 years.
• IDFC Bank offers 7.70% interest on term deposits held for more than 5 years, while Tamilnad Mercantile Bank, Lakshmi Vilas Bank, DCB Bank and Deutsche Bank offer 7.50% for the same tenure.
• SBI FD Rates for senior citizens vary from 5.75% to 6.75%. The highest rates offered by SBI are for tenures ranging between 46 days to less than 2 year, where the interest paid is 6.75% per annum.
• ICICI Bank Fixed Deposit Rates range from 4.50% to 7.25%. The highest rate of interest is offered for a time period that varies between 390 days to 2 years, where the rate offered is 7.25%.
• SBI, HDFC and Canara Bank offer an interest rate of 6.50% for all senior citizen FDs that are held for more than 5 years.

Eligibility for Senior Citizen FD

If you want to open a senior citizen fixed deposit then you will need to be a resident of India. NRI senior citizens too can open these FDs through NRE or NRO accounts. You also need to be above the age of 60 years at the time of opening the fixed deposit.

•          The depositor must have crossed 60 years of age on the date on which he/she opens  the respective term deposit account
•         Some banks may allow customers who are more than 55 years and have taken early retirement to apply for this type of FD scheme. This rule may vary from bank to bank and are subject to certain terms and conditions

Documents required for opening Senior Citizen FD

•          Age proof document
•          Passport
•          Aadhaar Card
•          PAN card
•          Photograph