If your age is 60 years or more and you are planning to invest in Fixed Deposit (FD), then this news is useful for you. Some banks are still giving up to 8.3% annual interest on FD to senior citizens. This interest rate is applicable on deposits up to Rs 3 crore. In such a situation, this can be a good opportunity for senior citizens who want better returns with safe investment.
Highest interest is being received in these banks
Jana Small Finance Bank is offering 8.3% annual interest on 3 year FD to senior citizens. At the same time, Shivalik Small Finance Bank and Utkarsh Small Finance Bank are offering 8% interest on 5 year FD. Before investing, be sure to check the current interest rates and terms and conditions of the concerned bank, as these may change from time to time.
When is TDS deducted on FD?
If the annual interest received from your FD in any one bank exceeds Rs 1 lakh, then the bank deducts TDS as per the rules. However, this is not an additional tax. If your total tax liability is less or not payable, you can also take refund of this TDS while filing Income Tax Return (ITR).
TDS can be avoided through Form 15H
If your total tax liability is zero after availing all the tax exemptions and Section 87A rebate, then senior citizens can avoid deducting TDS by submitting Form 15H in the bank. In the new tax system, the benefit of tax exemption under Section 87A is available on income up to Rs 12 lakh. However, banks do not know your total income, so they deduct TDS if the interest exceeds the prescribed limit.
Keep these things in mind before investing
Experts say that one should not invest in FD just because of high interest. It is also important to understand the reliability of the bank, insurance protection provided on deposits, lock-in period and tax rules. If your income does not come under the tax net, then unnecessary TDS deduction can be avoided by submitting Form 15H on time.
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