Investing in Tax Saver Fixed Deposit (Tax Saving FD) can lead to tax deductions under section 80C of the Indian Income Tax Act, 1961.
Even after retirement, senior citizens are still subject to annual taxes.
To lessen their tax burden, exploring options for tax deductions becomes essential.
Tax-saving FDs offer senior citizens a chance to earn interest while benefiting from tax savings.
Annual Deduction of up to Rs. 1.5 Lakh
Senior citizen investors can claim an annual deduction of up to Rs. 1.5 lakh by investing in tax-saving fixed deposits.
Banks typically offer slightly higher interest rates to senior citizens.
Any individual aged 60 or above can open a Senior Citizen Tax-Saving FD.
Interest rates may vary depending on the bank.
Key Features of Tax-Saving FDs
The tenure for tax-saving FDs is 5 years, allowing better financial management.
Premature withdrawal, partial withdrawal, loan against fixed deposits, and overdraft facilities are not available.
Senior citizens can also claim a deduction of up to Rs. 50,000 from the total interest earned on FDs within a financial year under Section 80TTB of the Income Tax Act.
If the interest amount deposited exceeds Rs.
50,000, banks may deduct Tax Deducted at Source (TDS) at the current lower rate of 10% under section 194A of the Income Tax Act.
To claim tax exemption on the interest earned from fixed deposits, senior citizens can use Form 15H.
Investing in tax-saving fixed deposits is a wise choice for senior citizens to secure their finances during retirement while enjoying the benefits of tax deductions.