Term Deposits by Senior Citizens- The share of senior citizens in term deposits i.e. FD is increasing. On the other hand, the younger generation is staying away from this type of traditional investment. The reason for this may also be due to the tax imposed on it. In such a situation, the question is arising whether the government should change the tax on FD returns?
No market risk on FD
Fixed Deposit (FD) is the favourite option of many people for investment. The reason for this is that investors get a fixed return in it. There is no market risk. According to a report, the share of senior citizens in term deposits (RD and FD) is continuously increasing. According to SBI Research Report, the share of senior citizens in the total FD is about 47 percent.
At the same time, youth are staying away from such traditional investments and are showing interest in the capital market.The average age of investors in the capital market is now 32 years. Not only this, about 40 percent of the investors are below 30 years of age. That means the youth are giving importance to investing in the capital market. In such a situation, the question is now arising whether the government should change the tax on returns from mutual funds or equity market?
Has so much impact
Currently, short term and long term capital gains are charged on investments. In a news published in our Yogi Economic Times, the tax on FD was calculated. In this, annual data of per capita income (PCI) on deposits from 1970-71 to 2023-24 was used. The results obtained from this showed that if the per capita income increases by Rs 1000, after paying tax it increases by Rs 613.Otherwise it could have increased by Rs 652. However, tax liability on long term and short term investments is different.
This is the reason to stay away from traditional investments
According to the report, youth are also staying away from depositing money in banks and term deposits. This is when investing here gives a guaranteed return. Despite this, such investments are not attracting the youth. Actually, after paying tax on the returns received from here, not much amount comes into hand.
How much interest do you get?
All banks offer slightly higher interest to senior citizens than ordinary investors. If a bank is offering 8.50 percent annual interest on FD for a specific period like one year or two years, then for senior citizens this interest rate can be 9 percent. At the same time, senior citizens have also got some exemption in the matter of paying tax. For these reasons also, senior citizens are more interested in investing in FD.