Senior citizens often face the challenge of managing their expenses post-retirement, especially since the discontinuation of the old government pension scheme and the absence of a pension provision in the private sector. In this context, fixed deposits (FDs) emerge as a vital financial tool for seniors looking to enhance their monthly income. Let’s delve into the details of how senior citizens can benefit from high FD rates and tax reliefs under different tax regimes.
Understanding Tax Implications on FD Interest
For seniors choosing the old tax regime, there’s a perk. Under Section 80C of the Income Tax Act, they can enjoy tax relief on the interest earned from fixed deposits. However, it’s crucial to note that this benefit does not extend to those under the new tax regime, where FD interest does not qualify for a tax rebate.
High FD Rates
Currently, certain banks offer attractive interest rates on 5-year fixed deposits, with some going as high as 9 percent. This high rate is an excellent opportunity for senior citizens to secure a steady flow of income, akin to a pension, by investing in these FDs.
How to Avail 9.1% Interest on Fixed Deposits
To benefit from the highest available interest rate of 9.1%, seniors are required to commit to a 5-year term FD, with the deposit amount being less than ₹3 crore. Opting for the old tax regime could further enhance the financial benefits through additional tax savings.
Banks Offering the Best Interest Rates for Seniors
Here’s a look at some banks that are currently offering competitive interest rates on fixed deposits for senior citizens:
- Suryodaya Small Finance Bank: 9.1%
- Unity Small Finance Bank: 8.65%
- North East Small Finance Bank: 8.5%
- Utkarsh Small Finance Bank: 8.35%
These rates are specifically for 5-year term deposits, which is a commitment but a fruitful one for those looking for higher returns.
Conclusion
For senior citizens, choosing the right bank for fixed deposits can significantly impact their financial stability post-retirement. With the potential to earn up to 9.1% interest, along with tax benefits under the old regime, fixed deposits provide a reliable income stream to manage household and medical expenses effectively.