In terms of investment, bank-fixed FD is a traditional method of investment. This option of the investor is seen as a safe investment. Also, the returns are known at the time of investment itself.
Apart from this, banks keep increasing interest rates from time to time to attract customers. The special thing is that tax exemption is also available on investment in bank FD. In this, one gets the benefit of tax exemption on 5 5-year FD.
For senior citizens, private banks are offering FD interest rates between 7.75% to 8.85% for different periods. In this too, some private banks are also offering extra rates for super senior citizens. At the same time, public sector banking sector banks (PSU Banks) are offering interest rates ranging from 7.25% to 7.95% on FD for senior citizens.
FD interest rates for general citizens
Private banks are offering good interest rates on FD for common citizens. Under this, the annual interest rate ranges between 6.7% to 8.85%. On the other hand, government banks are offering interest rates between 6.16% to 7.45% for common citizens. In this context, private banks are offering higher interest on FD than government banks. However, there may be a difference between the two regarding the duration of FD. The interest rates mentioned here are till August 14, 2024, and may change with time. Before making any investment decision, investors need to check the latest FD interest rates from different banks.
Tax exemption is available on bank FD
You can claim tax deduction up to Rs 1.50 lakh in a financial year under Section 80C on 5-year FDs in the bank. This claim can be made only in the old tax regime. 5 year FDs have a lock-in period of 5 years. This period can extend up to 10 years.
According to income tax rules, however, the interest received from FD is taxable. If the interest received on FD/TD in a financial year is more than Rs 40,000, then TDS (Tax Deduction at Source) is deducted. This limit for senior citizens is Rs 50,000. If a person’s income is less than the taxable limit, then he will have to fill out Forms 15G and 15H and request the bank not to deduct TDS on FD/TD.
