According to a report by researchers at the State Bank of India (SBI), the government has likely collected over Rs 27,000 crore in taxes from senior citizens on the interest they earned on term deposits in the last fiscal year. The total amount of deposits has increased by 143% in the last five years to Rs 34 lakh crore at the end of FY24. This growth is attributed to higher interest rates and an increase in the number of term deposit accounts by 81% to 7.4 crore.
It is estimated that at least 7.3 crore of these accounts have a balance of over Rs 15 lakh, resulting in senior citizens earning Rs 2.7 lakh crore as interest alone in FY24. The tax mop-up by the government from senior citizen deposits is estimated to be around Rs 27,106 crore assuming an average tax payment of 10%.
The government has introduced measures to encourage senior citizens to invest in fixed deposits, such as offering higher interest rates and raising the threshold of tax deducted at source (TDS) on deposits to Rs 50,000. This has contributed to the increase in senior citizens’ share in term deposits, which has risen to 30% from 15% five years ago. Some banks have also been actively attracting deposits, leading to an increase in deposit rates despite the Reserve Bank of India (RBI) holding the rate since February 2023.
It is important to note that the interest earned on fixed deposits, including tax-saving fixed deposits, is taxable as per the tax slab of the depositor. However, senior citizens can claim a tax deduction of up to Rs 50,000 on the interest earned on deposits, including SBI fixed deposits, under Section 80TTB. The interest income beyond Rs 40,000 (Rs 50,000 for senior citizens) is subject to TDS at 10% and 20% in the absence of a PAN card.
The SBI report highlights the significant growth in senior citizens’ term deposits and the impact of tax policies on their earnings. The government’s focus on providing better interest rates and schemes for senior citizens has led to a shift in depositors’ behavior and increased deposit accretion for this segment.
27000/- crore tax collection from senior citizens on Fixed Deposit is a paramount figure. It is all due to maintain personal harmonious relations with senior citizens and looking to them with grace.
our Banks should dig the.mine of senior citizens in their area who has a good amount
In absence of any welfare scheme and abolished old pension scheme senior citizen are left with no choice but to go with the term deposits as safety of their funds is paramount importance to them.
50000/- limit for Sr a citizens should be further revised upwards. It will also give a push to bank deposits making available much needed funds to the banks as well..
Government collecting taxes from senior citizens, where as politicians looted money / wealth from our country are free without paying taxes.
Government’s inability to ask taxes / collecting taxes from politicians
It’s like rob Peter pay to Paul
Senior Citizens are in desparate need of money to meet their living expenses medical expenses and other unexpected expenses as they are vulnerable to different types of risks due to age factor. In such situations they need adequate money if Government collects tax from their meagre income and distributing on welfare measures is unfair act
Senior citizens are left in despair as they have to spend lot of money medical expenses. A simple ankle twist rectification goes upto₹110000/-. All medicine cost has gone up by triple rates. A simple Amrintanjan pain balb cost u ₹200/-. So stop collecting tds from senior citizens deposits. As they cannot depend on children’s instead children’s are dependent on us. Due to unemployment.
Our governments should initiate suitable welfare schemes for senior citizens looking at their contribution to the national fund by way of taxes.Free medical facilities at reputed hospitals should be provided to senior citizens and its implementation should be enforced.Further increase in exemption limit should also be considered.