Tax on Fixed Deposits For Senior Citizens | Tax Exemptions | Mortgage Rio

Fixed Deposits (FDs) are a favorite savings choice for many people in India, especially senior citizens. Why? Because they offer steady returns and are considered safe. But did you know that even FDs can be taxed? Don’t worry! There are special tax exemptions that make life easier for our elders.

In this blog, let’s understand how tax on fixed deposits for senior citizens works, what exemptions are available, and how they can save more money.

What is a Fixed Deposit?

A Fixed Deposit is when you deposit a certain amount of money in a bank or NBFC for a fixed period. You earn interest on it. The longer the time, the more interest you earn. FDs are a great option for senior citizens because they are low risk and offer higher interest rates compared to regular savings accounts.

Why Senior Citizens Get Extra Benefits

In India, people aged 60 years and above are called senior citizens. The government gives them special financial benefits like:

• Higher FD interest rates (usually 0.25% to 0.75% more)
• More tax exemptions
• Dedicated saving schemes like SCSS

This helps them manage their retirement money wisely.

Tax Rules on FD Interest

Here’s the simple truth: interest earned on FDs is taxable. That means if your FD earns you income, it can be added to your total income and taxed as per your income slab.

But senior citizens get some special exemptions and benefits:

1. Section 80TTB — Big Tax Relief

This section allows senior citizens to claim a deduction of up to ₹50,000 per year on the interest earned from:

• Fixed Deposits (FDs)
• Savings accounts
• Recurring deposits (RDs)

Example: If a senior earns ₹60,000 as interest in a year, only ₹10,000 is taxable after using this exemption.

2. Form 15H — Say Goodbye to TDS

Banks deduct TDS (Tax Deducted at Source) on FD interest if it exceeds ₹40,000 (₹50,000 for senior citizens). But if your total income is below the taxable limit, you can submit Form 15H to avoid TDS altogether.

Just fill this form at your bank when opening an FD or at the beginning of the financial year.

3. No Tax If Income is Below ₹3 Lakh

Senior citizens have a higher basic exemption limit of ₹3 lakh. So, if your total income including FD interest is below ₹3 lakh, you don’t have to pay any income tax.

Tips to Save More on FD Taxes

Here are some easy ways for senior citizens to save on FD taxes:

• Split FDs across banks to stay under the TDS limit
• Use joint FDs with your spouse (only one person is taxed)
• Prefer Senior Citizen Savings Scheme (SCSS) for tax-saving and good returns
• Invest in 5-year tax-saving FDs (eligible under Section 80C)

Final Thoughts

Understanding the tax on fixed deposits for senior citizens | tax exemptions is very important for planning your retirement. With smart planning and by using tax benefits like Section 80TTB and Form 15H, senior citizens can save more and worry less.

So, if you’re a senior citizen or helping someone who is, make sure to explore all the options and enjoy the benefits that are specially made for golden years.

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