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5 Best 1-2 Year FDs With Good Returns Up To 7.5%

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By investing in fixed deposits, senior citizens can not only secure their deposits but also earn secure returns. Bank FDs allow the depositor to achieve a reasonable investment return over a set term. In the fixed deposit scheme, at the moment of opening the account, the interest rates are determined. The interest rates that are given rely on the bank, the amount of the deposit and the tenure of your preference. At the time of maturity, the interest accrued is measured on the principal balance and the full amount is credited to the account holder. At the time of maturity, the interest accrued is measured on the principal balance and the full amount is credited to the depositor. Fixed deposit tenure can vary from 7 days to 10 years. We have listed some of the banks in this article that offer attractive interest rates on 1 and 2 year FDs.

 

Key benefits of fixed deposits

Key benefits of fixed deposits

  • Fixed deposits generally give better interest rates when compared to regular savings accounts of banks.
  • On fixed deposits, premature withdrawal is not authorized, so you can not withdraw the deposit balance until maturity. That being said, after paying a penalty amount, you can withdraw the amount once in case of emergency situations.
  • Banks also have a term deposit sweep-in facility that enables the depositor to align a fixed deposit account with his/her savings bank account. The drawback of this service is that it allows the automatic transfer of the excess balance into the FD account from the savings account. It helps the depositor to receive FD rates on the savings account with the alternative of breaking the FD and accessing the balance at any particular time.
  • In order to face any cash deficit, all banks have a loan against FD facility. Depending on the bank, one can take a loan up to 90 per cent of the FD amount and the interest rate ranges from 1 per cent to 1.5 per cent higher than the FD rate.
Fixed deposit benefits for senior citizens
 

Fixed deposit benefits for senior citizens

Banks generally provide interest rates marginally higher than what is provided to regular citizens. That being said, in order to have a senior citizen account to get benefit from the deposit, age proof is mandated. Some of the key benefits of senior citizen FD are as follows:

  • To open a fixed deposit account senior citizens with an age limit of 60 or more are allowed.
  • In most banks, FD tenure varies from 7 days to 10 years for senior citizens.
  • An interest rate of 0.25 per cent and 0.75 per cent higher than the standard interest rate is provided to senior citizens.
  • Senior citizen FD also introduces a penalty in case of premature withdrawal
  • Senior citizens are also allowed to take a loan against their fixed deposit account respectively.
TDS on fixed deposit

TDS on fixed deposit

The bank is not allowed to deduct tax if your interest income is less than Rs 40,000 (Rs 50,000 for senior citizens) from all FDs. If your interest income surpasses Rs 40,000, there would be a 10 per cent TDS deduction. Your bank will deduct 20% TDS in case you do not furnish your PAN specifics. When your overall income is less than the minimum taxable amount, no TDS is deducted by the bank. The bank can not subtract TDS when there is no tax payable by you. In such cases, that being said, TDS will not be deducted by the bank only if you submit Form 15G or 15H to the bank in order to claim TDS-free income. By investing up to Rs.1.5 lakh in a tax-saver fixed deposit account, one can take advantage of the income tax deduction clause under Section 80C of the Income Tax Act. For the financial year, the tax liability is totally based on the net income and your tax slab rate.

Taxation for senior citizens

Taxation for senior citizens

Senior citizens are allowed to claim a tax deduction of up to Rs 50,000 per annum against received interest income from FDs, savings account and recurring deposits. If the interest income of a senior citizen from all FDs with a bank is less than Rs 50,000 in one year, no TDS will be withheld by the bank. If pension income and interest income are their only source of annual income, it has been decided to exempt elderly people from paying income tax returns under the Budget 2021 update. In order to allow banks to deduct tax against senior citizens above 75 years of age who have a pension and interest income from the bank, Section 194P was implemented.

1 Year FD Rates

1 Year FD Rates

BanksROI for general publicROI for senior citizens
Jana Small Finance Bank 6.75% 7.25%
RBL Bank 6.50% 7.00%
Ujjivan Small Finance Bank 6.50% 6.50%
IndusInd Bank 6.50% 7.00%
Yes Bank 6.25% 6.75%

2 Year FD Rates

2 Year FD Rates

BanksROI for general publicROI for senior citizens
Jana Small Finance Bank 7.00% 7.50%
RBL Bank 6.50% 7.00%
Ujjivan Small Finance Bank 6.50% 6.50%
IndusInd Bank 6.50% 7.00%
Yes Bank 6.50% 7.00%

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