Income Tax Saving: Senior citizens can save huge income tax, this FD is the safest option...

As the time for filing income tax returns approaches, people start looking for tax-saving options. Senior citizens are most worried about where to invest, where along with tax saving, their money will also be safe. So you should know about this special fixed deposit (FD) scheme so that your investment remains safe and tax is also saved.

Investing in the FD of any bank is considered safer than all other investment options. It is also beneficial for senior citizens because, in India, they get up to 0.50 percent more interest in FD than ordinary citizens. In this, there is also an option of tax-saving FD.

What is tax-saving FD?
Tax-saving FDs are like normal FDs, but their lock-in period is 5 years. This is a kind of cumulative FD, in which interest is paid to you on maturity after 5 years. In this type of FD, the interest you get every year gets added to the original amount of your FD.

Tax on FD and tax exemption available
Investing in tax-saving FD gives you the benefit of tax exemption under Section 80C of Income Tax. Under Section 80C, you can avail maximum tax exemption of Rs 1.5 lakh in a year. This includes investments made from your insurance to the post office.

Now if your FD earns income every year from interest, then they have to pay tax on the interest earned. However, senior citizens i.e. those who are above 60 years of age can also avail of exemption on their FD interest income. Under Section 80TTB of the Income Tax Act, they can claim tax exemption for total interest income on different investments up to Rs 50,000. This also includes income from the post office and FD.

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