As a salaried professional or business person, your objective should be towards both savings and availing tax benefits. The government encourages its citizens to invest in long term financial instruments which can boost the economy of the country while also providing financial stability to the citizens. You might already know that fixed deposit (FD) are one of the most traditional forms of investments, but you should look at tax-saving FDs, which can provide you with holistic benefits compared to most of the savings options. While interest earned on FDs are taxable, you can still claim tax benefits upto Rs. 1.5 lakhs using 80C of IT act, 1961.
Below are some of the critical things you should know before investing in a tax-saving fixed deposit:
1. The tenure or lock-in period of FDs is five years for you to avail tax benefits. Hence premature withdrawals are not acceptable.
2. An investor can choose a public/private bank & NBFC to apply for such FDs. For co-operative and rural banks, this is not applicable.
3. Individuals and Hindu Undivided Families(HUF) can avail this type of instrument.
4. You can also invest in a post office and fixed deposits thus invested are transferable from one post office to another.
5. You can invest in a tax-saving FD as an individual or as a joint holder. Nomination facility is also available.
6. Senior citizens get better interest rates compared to other individuals.
7. Multiple financial institutions are offering tax-saving FDs, and you need to choose the bank/NBFC with highest FD interest rates to get better returns.
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Below are some of the critical things you should know before investing in a tax-saving fixed deposit:
1. The tenure or lock-in period of FDs is five years for you to avail tax benefits. Hence premature withdrawals are not acceptable.
2. An investor can choose a public/private bank & NBFC to apply for such FDs. For co-operative and rural banks, this is not applicable.
3. Individuals and Hindu Undivided Families(HUF) can avail this type of instrument.
4. You can also invest in a post office and fixed deposits thus invested are transferable from one post office to another.
5. You can invest in a tax-saving FD as an individual or as a joint holder. Nomination facility is also available.
6. Senior citizens get better interest rates compared to other individuals.
7. Multiple financial institutions are offering tax-saving FDs, and you need to choose the bank/NBFC with highest FD interest rates to get better returns.
Read More:
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