Tax-saving fixed deposits for senior citizens that offer up to 7.75%

Tax-saving fixed deposits for senior citizens

Senior citizens have to bear the brunt as far as investment in fixed income instruments is concerned. Along with small savings schemes, the interest rates on fixed deposits have fallen drastically in the last one year.

RBI has continuously cut the repo rates. Banks and small-savings schemes have followed the same trajectory.

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Investments up to Rs 1.5 lakh can be claimed for deduction under Section 80C of the Income Tax Act.”

Nevertheless, there are some Indian banks that offer attractive interest rates for senior citizens at five-year tax-saving FDs.

Six private sector banks offer FDs with rates above 7 percent for a tenure of five years. IDFC First Bank, IndusInd Bank, RBL Bank and AU Small Finance Bank pay 7.25-7.75 per cent interest on their five-year tax-saving FD as per Bankbeck show data.

Deposits up to Rs 5 lakh are guaranteed by Deposit Insurance and Credit Guarantee Corporation, a subsidiary of RBI.

After allocating for small-savings and other avenues, investors can invest any surplus in such FDs.

Large private and public sector banks offer very low rates on tax-saving fixed deposits, given that customers come to parking for their savings.

Axis Bank, HDFC Bank and ICICI Bank offer 6 percent on five-year fixed deposits. State Bank of India (SBI) and Bank of Baroda (BOB) pay 6.20 percent and 6.30 percent respectively.

The minimum investment amount ranges from Rs 100 to Rs 20,000 for a five-year fixed deposit in banks.