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Resident senior citizens are eligible to get an additional interest rate of 0.30 percentage point or 30 basis points on their fixed deposits of less than Rs 2 crore, over and above the prevailing additional rate (for elders) of 0.50% per annum. (Representative Image)

The government has levied hefty tax on the interest earned on fixed deposits in the last financial year, collecting more than Rs 27,000 crore as levies. This information was given by researchers from SBI, the country’s largest public sector bank.

According to this report, the total amount of fixed deposits over the last 5 years zoomed by 143% to Rs 34 lakh crore at the end of the financial year 2023-24. Five years ago, this stood at Rs 14 lakh crore.

This implies a rapid increase in the number of people who have fixed deposits as their preferred investment avenue. As the report suggests, this can be attributed to higher interest rates offered on fixed deposits, which why more senior citizens are opting for investing in FDs. The total number of fixed deposit accounts has also increased by 81% to 7.4 crore during this period.

SBI researchers also estimate that out of all these deposit accounts, about 7.3 crore accounts have deposits of more than Rs 15 lakh. If we assume a 7.5 percent interest on these amounts, then senior citizens would have earned Rs 2.7 lakh crore only as interest, in the last financial year.

The report also notes that in the total corpus, around Rs 2.57 lakh crore stems from bank deposits, while the remaining amount is from Senior Citizen Savings Scheme. The report said that based on 10% average tax paid by senior citizens, the amount received from tax collection would amount to approximately Rs 27,106 crore.