Retired folk and individuals that survive on interest income have been hard hit in the last 1 year, as interest rates on fixed deposits have collapsed. One has to search hard to find bank interest rates that are around that 6 to 7 per cent mark.
There are some banks that are still offering a pretty decent interest rates on 1-year deposits. Take a look:
|1-year deposit interest rate|
|IDFC First Bank Savings Account||7%|
|Shriram Transport Finance||7%|
|Shriram City Union||7%|
We have included in the list a savings bank account as well as fixed deposits of NBFCs like Shriram Transport Finance and Shriram City Union. The latter two are well rated by Crisil, though Shriram City Union does not have a AAA rating and only a AA rating.
On the other hand bank fixed deposits maybe secure by at least upto Rs 5 lakhs, where the fixed deposits along with interest are secured by way of insurance.
The 1-year deposit interest rates mentioned above are also better than that offered by the post office. It's important to remember that the country's largest lender State Bank of India too offers a very low interest rate of just 5 per cent.
Taxation on fixed deposits
It's pertinent to note that fixed deposits are taxed and hence there would be a TDS. In the case of company fixed deposits, the tax deducted at source would be if the interest amount crosses the Rs 5,000 mark. In the case of company fixed deposits, the TDS would be if the interest amount crosses the Rs 10,000 mark.
In case you are not liable to pay income tax, it would be better to submit form 15g and 15h. It's also extremely important to remember that one must go in for the secure deposits, which are well rated. Bank deposits are also not a bad bet, though after the PMC Bank and Yes Bank issue, investors have increasingly become worried.