SBI Scheme: Generally, as the age increases, the ability to take risk regarding investment decreases. After retirement, no common investor wants to take any kind of risk regarding his money.
It is true that after being a senior citizen, risk cannot be taken on money, but it is not that the options to make money from money are exhausted. There are many bank deposits and government schemes for fixed and guaranteed income for senior citizens. One of these is the Senior Citizen Term Deposit Scheme of State Bank of India (SBI).
If you have recently retired and you have got a good amount of funds, then investing in SBI’s Senior Citizen FD scheme is a better option from a long-term perspective.
SBI FD Rates 2023: How much benefit for senior citizens
According to the information available on SBI’s website, senior citizens can deposit in SBI’s FD scheme for maturity ranging from 7 days to 10 years. Generally, senior citizens get half a percent (0.50%) more interest on fixed deposits than regular customers. Whereas, senior citizens get 1% more interest on FDs of 5 years to 10 years.
According to SBI’s website, regular customers are getting 6.5 per cent annual interest on FDs ranging from 5 years to 10 years, while the bank is offering 7.5 per cent annual interest to senior citizens. In fact, senior citizens get an additional half per cent premium interest under the SBI We-care deposit scheme on FDs of 5 to 10 years.
SBI FDs: ₹10 lakh will become ₹21 lakh in 10 years
Suppose a senior citizen makes a lump sum deposit of 10 lakhs in a 10 year maturity scheme of SBI. According to SBI FD Calculator, the investor will get a total of Rs 21,02,349 on maturity at an interest rate of 7.5 per cent per annum. In this, there will be a fixed income of Rs 11,02,349 from interest.
Let us tell you, SBI has increased the interest rates by 0.25 percent from 15 February 2023 on deposits of less than Rs 2 crore. Along with making loans costlier on behalf of banks, interest rates on deposits are also being increased. Earlier, SBI had increased the interest rates on FD on 13 December 2022.
SBI FDs: Interest income taxable
Fixed deposits / term deposits of banks are considered safe. This is a good option for risk-averse investors. Tax exemption is available under section 80C on 5 year tax saving FD. However, the interest earned on FD is taxable. According to Income Tax Rules (IT Rules), Tax Deduction at Source (TDS) is applicable on FD scheme.
That is, the amount received on maturity of FD will be considered as your income and you will have to pay tax according to the slab rate. As per IT rules, the depositor can submit Form 15G/15H for exemption from tax deduction.
