Best Tax-Saving FDs for Seniors: Banks Providing Up to 8% Interest

Tax-saving Fixed Deposits (FDs) are simple and safe investment option that helps you save on taxes under Section 80C of the Income Tax Act, 1961. They come with a fixed interest rate and a mandatory lock-in period of five years. Since they offer guaranteed returns with low risk, they are a good choice for those who want to reduce their taxable income while keeping their money secure.

Senior citizens get a higher interest rate on tax-saving Fixed Deposits of around 0.5% more than the standard rates. This makes tax-saving FDs a great choice for retirees seeking a safe investment with better returns.

What to keep in mind before investing in tax-saving FD

One of the main advantages of tax-saving FDs is that they offer a tax deduction of up to Rs. 1.5 lakh per financial year under Section 80C. This helps reduce your taxable income, resulting in lower tax payments.

As opposed to Equity-Linked Savings Schemes (ELSS) and other market-linked instruments, tax-saving FDs offer fixed interest rates, ensuring stable returns until maturity. This makes them a secure and predictable option for investors.

Tax-saving FDs are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), covering up to Rs. 5 lakh per depositor in each bank. This adds extra security to your investment.

The amount you invest in tax-saving FDs is eligible for a tax deduction. However, the interest you earn on these FDs is taxable. It is added to your total yearly income and taxed based on your income tax slab.

If senior citizens earn more than Rs. 50,000 in interest from FDs in a financial year, the bank will deduct 10% of TDS (Tax Deducted at Source). If they have not provided their PAN, the TDS rate increases to 20%. However, if their total income is below the taxable limit, they can submit Form 15G or 15H to avoid TDS deductions.

In tax-saving FDs, early withdrawals or loans are not allowed, unlike regular FDs. Investors must stay invested for the full five-year term.

Tax-Saver FDs do not renew automatically. When they mature, you will need to decide whether to withdraw your money or reinvest it, depending on your financial needs.

Here is the list of banks providing 7.50% and more on tax-saving FDs for senior citizens:

Overall tax-saving FDs are an Appealing choice for the retired people seeking safe investments with better returns.