FD interest for Senior Citizens

How to Calculate FD interest for Senior Citizens with Pension, Salary & Interest Income?

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Senior citizens should look for investment avenues that are risk-free such as Senior Citizen Saving Scheme and senior citizen FDs. If you are a senior citizen then there are special FD schemes for you which are known as senior citizen FD schemes. These FD schemes usually offer a slightly higher interest rate than regular FD schemes. 

However, it is a wise strategy to evaluate the returns of an FD before depositing your money in it. The following procedure needs to be followed for calculating FD interest and returns:

  • Visit the website of a bank or finance company that is offering the senior citizen FD scheme. Here, you will find a separate page dedicated to online FD calculator. Click on it and read the details if available. 
  • There will be a separate category for senior citizens. This category is made because many financiers are offering better FD interest rates to senior citizens. For example, Bajaj Finance FD is offering a 0.25% higher interest rate to senior citizens. This higher FD interest rate will help you to earn considerable returns post retirement.
  • After selecting the category you will need to enter details like deposit amount, FD tenor, FD type, etc. Once you have entered these details you can press the ‘Calculate’ button. The FD interest calculator will show the interest gains and returns on its own. 
  • You can change the values of deposit amount, FD type, and tenor to find the FD plan that suits your financial needs and requirements. 

Is Interest Earned from FDs Taxable?

The interest earned via high-interest fixed deposit is completely taxable as the interest income is added to your net income and the obtained sum is taken into account while determining the tax slab. 

For instance, suppose a senior citizen receives pension and salary also earns interest via FDs. In this case, all these three amounts are added and if then his income tax slab falls in the 20% tax bracket then he will need to pay 20% of this total income as tax. 

TDS on FDs 

TDS i.e. Tax Deductible at Source is applicable to interest income of FDs as well. It is deducted from the bank during the payment of interest and forwarded to the government on your i.e. the depositor’s behalf. 

According to Income Tax Act’s section 80TTB, you avail TDS deduction of up to Rs. 50000 every year on the interest earned through FDs if you are a senior citizen. It can all see via a mobile banking app available on the Internet. As the bank deducts the TDS in advance, you can claim TDS deduction if your interest income is less than Rs. 50000. 

You might be looking for a stable income source post retirement as you no longer will get a monthly salary. You can use FDs as an income source by investing in non-cumulative FD as it offers periodic interest gains. 

For instance, Bajaj Finance allows you to choose between monthly, quarterly, six-monthly, and yearly interest payouts. These interest gains can be utilized for clearing your medical bills, house rent, or any other regular expense. The other benefits of investing in Bajaj Finance FD are listed below:

  • High interest rate 

Senior citizens can grow their investments at an FD rate of up to 6.75%. This is one of the highest FD rates in India currently. If you have gathered a sufficient corpus till retirement then part of this corpus can be used to create wealth and a part of it can provide you a monthly salary. 

For instance, let’s you want to invest Rs. 30,00,000 in a senior citizen FD for 5 years, Now, you can invest Rs. 15 lakhs in a cumulative FD for compounding your returns swiftly and the remaining FD can be invested in a non-cumulative FD and a monthly interest payout option can be selected. The below table shows the returns and interest gains of both FD types:

FD Type AmountInterest rate Interest gainsInterest Payout (Monthly)Maturity Amount
Cumulative Rs. 15,00,0007.25%Rs. 6,28,520Rs. 21,28,520
Non-cumulativeRs. 15,00,0007.02%Rs. 8775 

Therefore, you can see that by splitting your corpus into two FDs, you can grow your investment and also earn a monthly salary. 

Multi-Deposit Facility 

The multi-deposit facility of Bajaj Finance lets you invest in more than one FDs at once. This feature is ideal for those who want to split their savings into FDs of different tenors and types. Moreover, the payment for all the deposits can be made with a single cheque. 

Stable Returns 

Bajaj Finance FD has received MAAA/stable ratings from ICRA and FAAA/stable ratings from CRISIL. It is a high enough credit rating to consider it a safe avenue for parking your savings after retirement. If you are a taxpayer, then must know the Income Tax Benefits to avoid TDS on FD. Therefore, you can check the FD plans now and use their online FD form if you find them suitable as per your investment plans and needs. You will also get a 0.10% additional FD rate for choosing the online investment mode.

Among the various instruments that can be used to multiply savings, the fixed deposits seem to be the most appropriate to senior citizens as they are not only risk-free but also provide sufficient returns. Along with that, you can also invest in a non-cumulative FD to earn a regular income from your FDs. Bajaj Finance FD is a good option because it provides the option of monthly interest payout and also offers a higher FD rate to senior citizens. Also, its multi-deposit facility can be used to invest in more than one FDs simultaneously. Moreover, as it is a stable instrument you can rely on it for ensuring your capital post retirement.