Fixed Deposit is a favoured investment avenue among senior citizens because of its safety and guaranteed returns, as it is not subject to market fluctuations. As such, it is a great investment option for you if you are a senior citizen who is risk-averse. Trusted issuers like Bajaj Finance offer safety and high returns on a Senior Citizen FD. For instance, if you hold a cumulative FD for a period of 36 months you can earn interest at the rate of 9.10% as a senior citizen. In addition, it offers flexibility in terms of tenor and frequency of payout and you can open an FD with just Rs.25,000. FD for senior citizens offer attractive tax benefits too.
With an FD calculator, you can compute the exact maturity amount too. Also, you can ascertain the right amount to invest for the right tenor thanks to this online tool. This also helps you in laddering your fixed deposits, so you can enjoy liquidity of funds with one FD maturing after the other.
Tax benefits on FD for senior citizens
As a senior citizen, you look to invest in financial instruments that give you better post-tax returns. This is possible if you invest in FDs. Interest income of up to Rs.5,000 from company FDs is exempt from tax. Also, you can claim a tax deduction on annual interest income of up to Rs.50,000 on a bank FD.
You can claim this benefit under Section 80TTB Senior Citizens Fixed Deposit Account the Income Tax Act. This is only applicable to Senior Citizens Fixed Deposit Account holder residing in India. Banks deduct TDS on interest income if it exceeds Rs.10,000. If your income is below the tax limits, you can submit Form 15G and 15H to the bank holding your deposits and request them not to deduct any TDS.
Higher FD interest rates for senior citizens
Many financial institutions offer higher interest rates than the average on an FD for senior citizens. Bajaj Finance in this regard, offer attractive FD interest rates of up to 9.10% p.a., which is 0.35% higher than usual.
Other benefits of FD
Other than interest rates and tax, FDs offer the following benefits.
- Choose your interest payout
You can easily choose between cumulative FDs and non-cumulative FDs based on your financial preference. By investing in a non-cumulative fixed deposit you can earn a good post-retirement income. A non-cumulative FD on the other hand, gives you the flexibility of selecting an interest payout of your choice.
You can choose an interest payout frequency of monthly, quarterly or annually, as per your needs. If you are a senior citizen and depend on interest income to meet your regular expenses, you can select a frequent interest payout.
- Get higher safety and stability
You need not worry about risk when you invest in FDs by trusted issuers like Bajaj Finance. ICRA and CRISIL have rated Bajaj Finance the highest safety ratings of MAAA and FAAA respectively. Hence, you can rely on earning interest and getting back your original investment.
- Start with a low minimum deposit
You can invest in FDs with a minimum amount as low as Rs.25,000, with most financial institutions, making it easy on your pocket. So, if you ever have a windfall gain, you know where to invest it.
- Choose a flexible tenor
You have the freedom to choose a tenor between 12 and 60 months for FDs. You can select the tenor as per your financial needs. The right tenor helps you meet your needs for liquidity too. Plus, you can ladder your FDs so you can receive maturity amounts at different points of time to meet different goals.
- Benefit from online application and management
Issuers like Bajaj Finance allow you to apply for an FD through an easy online application process while saving time and effort. By doing this you can avoid submitting lengthy documentation and waiting in long queues. Also, through online management, you can access your fixed deposit account and keep track of your investments easily from anywhere.
- Get higher interest payout on lump sum deposit
By investing a lump sum in FDs, you can earn a higher interest payout on maturity. To achieve this, go for cumulative FD. By investing in a cumulative fixed deposit, you can enjoy a higher maturity amount. On maturity, you will receive both, the FD interest and the principal. Also, by using a FD calculator, you can calculate the exact amount that you will receive upon maturity of your investment.
Keep these benefits in mind and invest in an FD to gain from a higher interest rate and tax rebates.