Old age doesn’t only bring with itself a title of senior citizen. It is often accompanied with less responsibility, no income source and less recognition. The only thing that really is useful for such times is the savings. But wait, what if one provide with an option to save again, get monthly payments out of it and no tax filings? Yes, a senior citizen fixed deposit is what every senior citizen should opt for.
A senior citizen fixed deposit is like any fixed deposit but there are various extra benefits of higher interest payments, taxation and other provisions.
Eligibility
All the Indian residents of age 60 years and more are eligible for senior citizen fixed deposit. NRI can also opt for senior citizen fixed deposit via NRO, NRE or FCNR accounts.
Interest rates
Many banks offer special interest rates which are slightly higher than the interest rates available to the ordinary fixed deposits. It can be, for instance, 0.5% greater than interest normally paid. However, there is a constrain over the term of the deposits. Special features such as interest rates are available if the deposit is maintained for more than 1 year. No as such benefits are available to the NRI accounts.
Tax Treatment
Income tax department allows concession on the income tax earned from the interest payments of the senior citizen fixed deposit. Thus, to avail this benefit, one has to submit Form 15G to stop bank from cutting the TDS on the interest income.
Interest on the NRE account is exempted from the tax. NRO and FCNR are liable to the taxes.
Features
- A senior citizen fixed deposit can be opened for tenure ranges from 7 days to 10 years. However, there are some special provisions that require a minimum lock in period to avail certain benefits. Most of these conditional schemes are tax saving instruments in such FDs.
- Nomination can be granted if the depositor can declare a person as a nominee.
- Interest rates are flexible and are declared on the basis of the term of the deposit. Deposits for longer term attract more interest income.
- Interest rates which are compounded quarterly can either be transferred in to account of the depositor or added to the maturity value of the fund of FD.
Being at an old age, no investor wants to put the investments into a risky profile. A fixed deposit is secured and provides a decent return on the savings. A senior citizen fixed deposit is designed in such a way so that the senior citizens feel secured and valued. Thus, choose to invest in senior citizen FD and live a long life with dignity and surety of the future return.
