When it comes to investing, there are numerous options for senior citizens. They can opt for Post Office Monthly Income Scheme (POMIS), Senior Citizen Savings Scheme (SCSS), mutual fund scheme, annuity scheme, and Senior Citizen Fixed Deposit. While some of these offer exciting rates of interest with a high-risk factor, others offer guaranteed returns with a relatively low rate of interest.
Among these, Senior Citizen FDs is one of the most favourite options for risk-averse investors. Coupled with maximum security for the invested amount, you get a higher rate of return than regular FDs. The tenure ranges from 7 days to 10 years.
What is a Senior Citizen Fixed Deposit (FD)?
Fixed deposit is an instrument of investment where you deposit a certain amount of money for a fixed period of time in a bank or an NBFC. You are offered a fixed rate of return on the invested amount throughout the investment tenure.
Senior Citizen FDs are fixed deposit schemes made only for citizens above the age of 60. It gives them higher interest than a regular FD.
What are the features and benefits of a Senior Citizen FD Account?
Mentioned below are the features and benefits of FDs for senior citizens.
Senior citizen fixed deposits offer you a higher rate of interest than a normal FD.
The interest gained from FDs can act as a monthly income for senior citizens, who may not have an alternate source of income..
For investing in a 5-year FD, senior citizens can get tax benefits up to ₹1.5 lakh under Section 80C of the Income Tax Act
Fixed deposits offer guaranteed returns on maturity.
The interest amount on an FD for senior citizens can be paid out monthly, semi-annually, or annually.
What is the rate of interest offered for Senior Citizen Fixed Deposits?
Senior citizen FD rates and tenures vary from bank to bank . Generally, the rate of interest of a senior citizen's fixed deposit is 50 basis points (bps) higher compared to what is offered to the general public.
What documents are required for opening a senior citizen fixed deposit account?
Opening an FD account is very easy. You can open it either online and offline depending on your convenience. To open a senior citizen fixed deposit account, you need the following documents.
Photo ID proof like a passport, voter ID card, or Aadhaar card
Age proof
Address proof like Voter or Aadhaar card or latest electricity bill
PAN card (or Form 60 if PAN card is unavailable)
Form 15H, if your income is below the taxable limit
Takeaway
Fixed deposits are the safest forms of investments, as all banks and NBFCs are regulated by the Reserve Bank of India (RBI). Moreover, deposits of up to Rs 5 lakh for each FD account in a bank are insured by DICGC (Deposit Insurance and Credit Guarantee Corporation).
1. What’s the interest rate offered by Bajaj Finance and Shriram Finance for senior citizen FD?
Bajaj Finance and Shriram Finance offer lucrative rates of interest at 8.20% per annum and 9.10% per annum respectively on senior citizen fixed deposits.
2. How does the rate of interest of an FD vary with its tenure?
The rate of interest in an FD is directly proportional to the tenure of an FD. This means, the higher the tenure of your FD, the higher the rate of interest.
3. Are fixed deposit investments taxable for senior citizens?
Senior citizen fixed deposits are taxable. There is a 10% deduction in the form of TDS if the amount of interest in a senior citizen fixed deposit exceeds Rs 50,000 in a financial year.
