These banks offer up to 7.75% interest rate on tax-saving FDs for senior citizens – Tax-saving FDs

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Main features of tax-saving FDs

According to the ICICI Bank website, here are main features of a tax-saving FD:

· The lock-in period is five years

· The interest earned, as a part of the Tax Saving Fixed Deposit, is taxable, and is deducted at source.

· Premature withdrawals, Loans or Overdraft (OD) facilities are not available for a Tax Saving FD.

· There is no auto-renewal facility for Tax Saving Fixed Deposits

· Tax Saving FD interest rates remain unchanged over the five-year period

· Interest rates differ from bank to bank, and rates for Indian citizens, Hindu Undivided Family (HUF) also vary.

· If it’s a joint Tax Saving Fixed Deposit, tax benefits are available only to the first account holder.

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Tax benefits
· A major benefit of a tax-saving fixed deposit is that the investment is excluded from deduction under Section 80C. For a fixed duration of five years, investors can invest up to Rs. 1.5 lakh and benefit from tax advantages.

· Additionally, interest payments received up to Rs 50,000 in a fiscal year will not be subject to TDS deductions. A senior citizen might avoid TDS deduction by giving the bank Form 15G/15H

· According to the recently amended Income Tax Act section 80TTB, interest payments paid on deposits kept with banks, co-operative banks, or post offices up to Rs 50,000 are in fact tax-exempt.

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