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Senior citizens generally prefer to invest their money in risk free financial products offering attractive interest rates. While there are many avenues to explore, fixed deposits (FDs) are one of the preferred options for senior citizens as FDs offer guaranteed returns without any financial risk. One of the frequent concerns of senior citizens is tax planning. Without tax planning, your return on any investment can be low.
Tax Saving FD is a financial option that allows you to invest to save tax under Section 80C of the Income Tax Act. The minimum tenure for a fixed deposit under the Tax Saving Scheme is five years. Higher interest rates are offered to senior citizens when they choose to invest their money in FDs. Tax saving FDs offer higher interest rates to senior citizens and help them save tax.
Section 80C of the Income Tax Act allows you to claim a tax deduction of up to Rs 1.5 lakh for investing your money in a tax saving FD.
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If a senior citizen wants to save money then a tax saving FD can be a good option. It would be best to remember that premature withdrawal is not allowed in tax-saving FDs as the tenure of the scheme is between 5 to 10 years. You can choose according to your financial goals.
It is advisable to open an FD account in a bank having a savings account. Still, you can choose any other financial institution where you are getting attractive interest rates. On maturity of your tax saving FD, the amount gets transferred to your savings account.
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You can compare the interest rates of different financial institutions before opening a tax saving account. You also need to see how much money you need to reach your financial goals. It is easy to calculate the total amount you will get on maturity. If you still have doubts regarding the tax savings and maturity amount, discuss them with your preferred financial institutions before opening an FD account.
Given below are more than 30 financial institutions and their interest rates on tax saving FDs. It helps you compare interest rates and shows how an FD of Rs 1.5 lakh will grow after five years with different interest rates. You can take the decision as per your financial needs and expectations.
Note: Data on the website of respective banks as on 31st May 2022;
The interest rates of all listed (BSE) public and private Indian banks were considered for data compilation; Banks whose data is not available on their website are not considered. The table includes only tax saving FDs for senior citizens (except super senior citizens) with a tenure of 5 years. *Assuming quarterly compound interest for all banks;
Compiled by BankBazaar.com
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