FD for senior citizens: Senior citizens can avail tax deduction through bank FD

Bank FD Rates: Senior citizens can avail tax deductions by investing in tax-saving fixed deposits. Under Section 80C of the Income Tax Act 1961, Rs. Tax exemption up to Rs 1.5 lakh can be availed. Generally, interest received on fixed deposits is taxable. However, senior citizens have the opportunity to get tax free returns in tax saving FDs.

Generally, cumulative FDs pay interest on maturity, while non-cumulative FDs pay interest periodically. Under section 80TTB of the Income Tax Act, 1961, gross income up to Rs. You can avail discount up to Rs 50 thousand. This benefit also applies to interest earned on tax saving FDs.

Therefore, keep in mind that to get the benefit of tax deduction in a year in savings plans including bank savings, post office deposits, banking securities, government securities, Rs. The limit is up to Rs 50 thousand. However, this limit is not applicable for senior citizens. Because, most of the senior citizens are dependent on interest income. Senior Citizen Tax Saving FD Rs. You can invest up to Rs 1.5 lakh. In which instead of investing in lump sum, tax savings can be availed by investing in small portions.

For example, if a senior citizen invests Rs. 120546, while at the end of the year it was Rs. Interest will be given on Rs 8662, which is less than Rs 50 thousand hence no tax or TDS is payable. In the second year it was Rs. 129029, and in the second year Rs. 17947 returns. If the same amount is invested for five years, the amount on maturity will be Rs. Interest of Rs 49999.85 is available. Therefore it is completely tax free.