A fixed deposit implies an investment plan that is offered by banks, non-banking finance firms and others. As compared to the returns produced by a standard savings account, FDs give better returns on the invested principal amount.
Fixed deposits as the name suggests have a specified period. The FD investment duration may either be short-term or long-term, depending on the investment portfolio of a customer. The fixed deposit interest rates differ from one lender or bank to another.
However, fixed deposit holders need to note that, without financial consequences, they cannot withdraw the amount invested until the deposit reaches maturity. In emergencies, after the payment of fines, early withdrawal is allowed.
Types of FD investments available
Before investing, there are many fixed deposit forms that investors need to hear. You will end up taking up plans not appropriate for your investment goals without such information. Some of the standard options available to prospective investors are listed below.
- Corporate FD
- Standard FD
- Senior citizen FD
- Tax-saving FD
- Cumulative FD
- Non-cumulative FD
- Flexi FD plans
- NRO FD account
- NRE FD account
In this writeup, we will discuss the benefits and features of Senior Citizens fixed deposit investment.
What’s a Senior Citizens Fixed Deposit?
A fixed deposit remains the most common of all investment avenues among people belonging to almost all age groups in India, especially senior citizens. One of the critical factors, along with the stability and assured returns it offers without any risk, remains the fixed deposit rates given to senior citizens. Also, in some of the banks or NBFCs (Non-Banking Financial Companies), the account opening procedure for any FD is quite simple.
Typically, with an additional interest rate of about 0.20 percent – 0.75 percent depending on the bank, senior citizens are protected. They can also pick the interest payouts frequency and gain from the Fixed Deposit investment’s high stability and conveniently monitor their investments.
What are the benefits and features of Senior Citizens Fixed Deposit Investment?
- Attractive and higher FD rates for senior citizens: In this scheme, the FD rates for senior citizens are often provided depending on the length of the term deposit. FD rates are usually higher than the regular FD investments.
- The option of Periodic interest payout: The frequency of interest payout options can be chosen on a monthly, quarterly, or annual basis.
- Online booking through net banking: One significant advantage is the simple account opening process, i.e. the online process to open a new account. Whether you are a bank client or not, you can fill in the account opening query on the website of a bank, and a representative can get back to you.
- Assured Returns: Returns are generally the same, regardless of inflation or the present business situation.
- Stable and protected investment: Your hard-earned money invested in senior citizen FD would be stable as RBI governs banks.
- Some of these deposits can even be tax saver FDs that have a lock-in period of 5 years and offer the special FD interest rates for senior citizens.
- Additional services: Be it senior citizens or any other FD, all banks on all FDs have premature withdrawal, nomination, deposit, and sweep-in services.
- Deposit limit: The deposit limit cap for the FD deposits under these schemes can vary from ₹ 1 crore to much higher amounts. Banks determine these limits, and they can differ from one bank to the other.
- For most of the senior citizen schemes an additional FD rate is applicable (usually ranging from 0.20% to 0.75%),
- Senior citizens can close, even early, their fd schemes at any time.
- The interest rate received on an FD scheme can be translated into monthly income, which can be preferred by the elderly individual (senior citizen) needing monthly income.
- These deposits could also be fixed deposits for saving tax that has a 5-year lock-in duration and also offer preferential FD rates for senior citizens.
Eligibility criteria for opening a senior citizen FD investment account
- An Indian resident can open a fixed deposit for senior citizens. However, with the aid of NRE or NRO accounts, NRI senior citizens can start these FDs too. At the point of booking the fixed deposit, you ought to be over 60 years of age.
- Some banks often encourage clients over 55 years of age who have retired early or willingly to qualify for this form of FD scheme. This offer is subject to specific terms and conditions and may vary from bank to bank.
- Several banks also take super-senior people into account. There are persons over 80 years of age; extra fixed deposit interest rates are offered to these senior citizens over the rates offered to senior citizens and ordinary citizens.
What are the tax benefits of Senior Citizens FD investment?
Senior citizens are entitled to claim a deduction of up to ₹ 50,000 on interest income received by these entities (cumulative) as a deduction by total gross income before the tax levy, in compliance with section 80TTB of the Income Tax Act.
- The Interest Revenue from fixed deposits and bank accounts
- Interest received on Post office deposits
- Interest gained on savings in a co-operative organization (regional co-operative banks) involved in the banking industry.
No TDS deduction from interest payments paid in one financial year of up to ₹ 50,000. To escape the TDS deduction, Form-15H can be submitted to the respective bank by a senior citizen.
Special FD scheme for senior citizens
Even in this falling interest regime, some banks such as SBI, HDFC among others are offering special FD investment plans with fd rates over and above the existing interest rates. These special schemes are available till the end of the year, i.e. 31st December.
Fixed Deposit investments are trendy investment options for those who don’t want to take huge risks. That said, FD schemes for senior citizens are even more attractive as they offer higher returns due to the higher interest applicable to those schemes. Go on to start a fixed deposit investment account for senior citizens and avail the vast benefits offered along with it.