Senior Citizen Fixed Deposit Scheme, Because they are safe and provide guaranteed returns, fixed deposits are among the most popular investment options. Senior Citizen Fixed Deposit Plans give senior individuals the opportunity to earn a little greater interest rate than the general population. However, a number of other criteria influence senior citizen FD interest rates, and tenure is one of the most crucial ones.
Contents
Senior Citizen Fixed Deposit Scheme – Important Highlights
The table below shows the important details about the Senior Citizen Fixed Deposit program:
| Senior Citizen FD Scheme | |
| Minimum and maximum investment amount | The minimum deposit amount required to be invested in a senior citizen FD varies from bank to bank. |
| Tenure | It usually ranges from 7 days and a maximum of 10 years. You can choose the tenure within this range according to your needs. |
| Premature withdrawals | FDs normally provide the facility of premature withdrawal which can act as an emergency fund. However, banks levy a penalty on premature withdrawal of FD which differs from bank to bank. |
| Loan against FD | FD can be used as collateral to obtain a loan. The maximum loan sanctioned depends on the principal amount. |
| Nomination facility | While opening an FD, you must mention the nominee so that those dependent on you don’t face any difficulties while claiming the money. The depositor needs to fill out a separate form while giving a nomination, known as Form DA1. |
| Automatic renewals | Banks also offer the facility of automatic renewals at the time of maturity if no instructions are mentioned at the time of opening the account. The tenure will be the same as the existing FD account. |
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Key Features of Senior Citizen Fixed Deposit Schemes
The following lists the characteristics of the senior citizen fixed deposit plans that different banks offer:
- Senior citizen fixed deposits have a term of seven days to ten years at most.
- Most schemes charge an extra FD rate, which usually falls between 0.25% and 0.65%.
- Although certain banks may offer monthly, yearly, or semi-annual interest calculations, banks typically use quarterly compounding bases.
- Investors who book FDs for a 5-year term are eligible for tax savings, meaning they can deduct up to Rs. 1.5 lakh under 80C.
- These plans also provide bulk deposits, which typically start at Rs. 2 crores. Bulk deposits, however, could not provide favorable rates.
Taxation under the Senior Citizen Fixed Deposit Scheme
Section 80TTB of the Income Tax Act permits senior persons to deduct up to Rs 50,000 from their gross total income before taxes are levied on interest income they have accrued from these organizations.
- Interest received from fixed deposits and bank savings
- Interest received on deposits made at the post office
- Interest is received on deposits made with a cooperative group that operates a bank. This comprises a land development bank and a cooperative land mortgage.
- Additionally, interest payments up to Rs 50,000 in a single fiscal year would not be subject to TDS deductions. A senior person might submit Form-15H to the bank in order to prevent the deduction of TDS.
Benefits of FD for Senior Citizens
The following are the main advantages of funding a senior citizen fixed deposit plan:
- Low Risk
FD is regarded as the safest and most dependable type of investment for older adults. Furthermore, the returns on FDs are unaffected by changes in market circumstances.
- Guaranteed Returns and Maximum Security
Because fixed deposits are not correlated with the market and are therefore not impacted by changes in the market, they are an excellent option for older individuals looking to invest. You know what to expect from your investment because the FD interest rates are the same throughout the tenor.
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- Interest Benefits
A range of interest payout options are available to senior citizens, wherein FD interest is regularly credited to the depositor’s savings account on a monthly, quarterly, half-yearly, or annual basis.
- Convert into a Monthly Income
An elderly person can use the interest they get from their fixed deposits as a monthly income to help them plan for retirement.
How to Open a Senior Citizen FD account?
Opening a Senior Citizen FD account can be done online or in person at the bank. These days, the majority of banks also let customers fill out and submit their FD account opening form online. Additionally, senior persons have the option of receiving interest payments on a monthly, quarterly, or annual basis. One can go to the post office and fill out the appropriate FD opening form to start a senior citizen fixed deposit account. The investment amount must then be deposited, either by demand draft or check.
Senior Citizen FD Eligibility
- Seniors who are 60 years of age or older are deemed qualified to create a senior citizen FD account.
- Very few banks also take very senior persons into account. These are the people over 80 who are eligible for higher fixed deposit interest rates than other elderly citizens and the general public.
Documents Required for Senior Citizen FD
- PAN Card
- FD account opening application form
- KYC Documents (Aadhar card/passport/driving license/voter ID)
- Passport-size photographs
- Form 15H or self-declaration form
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Faq’s
Q. What interest rate does Post Office FD provide Senior Citizens?
Ans: The Post Office Senior Citizen Savings Plan or Post Office Fixed Deposit Plan offers a 7.40% interest rate with quarterly interest payments.
Q. How are older folks’ FD taxes handled?
Ans: TDS is applied at a rate of 10% if the interest generated during a fiscal year (April 1–March 31) is above Rs. 50,000.
Q. For whom is a senior citizen fixed deposit account available?
Ans: The senior citizen fixed deposit plan is open to anybody 60 years of age or older.
Q. What distinguishes senior citizen fixed deposits from regular deposits?
Ans: The senior citizen fixed deposit has different interest rates than conventional FDs. In general, banks provide senior citizens 0.5% more interest than they do for other FD clients.
Q. What paperwork is required to start an FD account for a senior citizen?
Ans: To successfully book a fixed deposit account with any bank or non-banking financial company (NBFC), the following list of papers must be presented:
- Proof of photo identification (passport, voter ID card, etc.)
- Proof of age and residency (such as a passport, Aadhaar card, or most recent water or energy bill)
- PAN card (or, in the event that one is not available, Form 60)
- Form 15H
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