Why do senior citizens need Tax Saving Fixed Deposit?

As you grow older, you need to ensure your investment patterns become less and less speculative. This is a natural investment progression for senior citizens who need their finances to be secured and less volatile. It is no surprise that fixed deposits (FDs) are a popular investment choice among senior citizens. If the income of the senior citizen attracts tax liability, there is the option of investing in tax saver FDs as well. 

IDFC FIRST Bank Tax Saver Fixed Deposits offer attractive interest rates to senior citizen customers. To understand the benefits tax saver FDs offer to senior citizens, it is worthwhile to look at its key features. Each of the following features underlines why senior citizens should consider tax saver FDs as a prospective investment option.

Tailor-made for Senior Citizens 

Senior citizen FDs, including tax saver ones, are specifically designed to meet the investment needs of senior citizens. Anyone above the age of 60 can invest in a senior citizen FD account.

Tax saving 

Under section 80C of the Income Tax Act, 1961, one can claim deductions of up to Rs 1.5 lakh in a financial year. This can be claimed only for tax saver FDs and not against any other types of senior citizen FD.

Earn more from idle funds 

Senior citizens can utilise their idle funds to earn an additional income through tax-saving FDs. This means that your money is still growing when deposited at IDFC FIRST Bank. FDs also earn more interest income than savings accounts and recurring deposits.

Lock-in period 

These FDs differ significantly from regular FDs. They have a lock-in period of five years. This clause ensures that you maintain financial discipline through your investments, and the FD is not cashed in prematurely. Notably, premature withdrawal is allowed in the case of other FDs, subject to premature closure penalties but not in case of a Tax Saver FD.

Tax on interest earned 

The interest income earned on these tax saver FDs attracts income tax. Accordingly, TDS is deducted on such interest earned. However, a senior citizen can avoid or minimise TDS by submitting Form 15H to the bank. Senior citizens can claim a deduction of up to Rs 50,000 on the interest earned on tax-saving FDs under section 80TTB of the Income Tax Act.

Flexibility 

Tax saver FDs can be opened at any public or private bank. IDFC FIRST Bank Tax Saver FD offers attractive interest rate to senior citizens on deposits of up to Rs 2 crore. A senior citizen can open a tax saver FD either individually or jointly. Nominees can also be appointed for these FD investments.

India's citizens and residents can open a tax saver FD account with IDFC FIRST Bank with minimal documentation and prompt processing. A senior citizen investing in a tax saving FD can collect the interest income via monthly or quarterly payout as per their requirement at the time of booking the tax saver FD. If a significant amount is invested in these FDs, a senior citizen can meet regular household expenses through this payout. IDFC FIRST Bank's Tax Saver FD can be a welcome addition to any senior citizen's investment portfolio.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.