Elderly people should be aware that investing in a secure investment strategy, such as a fixed deposit scheme, is highly advised for tax savings because it not only offers fixed returns but also provides DICGC with a guarantee that your investments are secure up to 5 lakh. For them, the two DICGC-insured banks listed below are offering over 8% returns on 5-year fixed deposits that save on taxes.
Utkarsh Small Finance Bank
The interest rates for Utkarsh Small Finance Bank's fixed deposits were last changed on August 12, 2022. For tax-saving fixed deposits of five years, the bank is currently offering an interest rate of 7.50% for the general public and 8.25% for senior citizens. When the interest rate for senior citizens is taken into account, Utkarsh Small Finance Bank is the only bank in the banking industry offering the highest interest rate on fixed deposits that save taxes, which is 8.25%.
Jana Small Finance Bank
On June 15th, 2022, Jana Small Finance Bank last raised the interest rates on fixed deposits under 2 Cr. Following the modification, the bank is now offering an interest rate on tax-saving fixed deposits maturing in 5 Years[1825 Days] of 7.25% for the general public and 8.05% for senior citizens. When the interest rate for senior citizens is taken into account, Jana Small Finance Bank ranks second on our list of banks offering the highest interest rate on tax-saving deposits. By investing in Jana Bank's Tax Saver Fixed Deposit, you are eligible for a tax deduction of up to 1,50,000 rupees under Section 80C of the Income Tax Act of 1961.
However, investors should be aware that tax-saving fixed deposits have a 5-year lock-in period, making early withdrawals, partial withdrawals, and loans and overdrafts against deposits prohibited. Additionally, only individuals and HUFs are qualified to invest in tax-saving fixed deposit(FD) schemes, and investments up to 1.5 lakh in a financial year allow you to claim tax deductions under section 80C.
Investors can open a joint or individual tax-saving fixed deposit account, however in a joint account, only the first or principal account holder will be eligible for the tax benefits. Depending on the investor's tax bracket, the interest received is taxable, so TDS would be subtracted. In view of the current environment of rising interest rates, elderly folks may want to think about investing in tax-saving fixed deposits in order to not only earn larger returns but also reduce their tax obligations.