New Delhi: Fixed deposits (FD) are one of the most popular instruments used for saving by Indians. Even for the purpose of tax-saving under Section 80C of the Income Tax Act.1961, many prefer tax-saving fixed deposits over other instruments like, PPF, ELSS, ULIP, NPS that offer better returns, because of convenience and guaranteed returns. One can save up to Rs 1,50,000 in a financial year in tax-saving FDs.
Here are the features, interest rates of Tax-saving fixed deposits:
1) Tax-saving fixed deposits come with a lock-in period of five years, before which you can not withdraw your money.
2) Only resident individuals and Hindu Undivided Families (HUF) can open these deposits.
3) Tax-saving FDs can be opened either in single or in joint names. In case of joint holding, only the first holder can claim the tax benefit under Section 80C.
4) One can choose either monthly/quarterly/annual interest payout option on these FDs. You can also choose compounding option wherein interest earned will be re-invested.
5) Interest earned on tax-saving fixed deposits is taxable. The interest amount gets added to your annual income and will be taxable as per your income tax slab. Interest payable is calculated on a quarterly basis only.
6) Banks deduct TDS (tax deductible at source) at the rate of 10 per cent on the annual interest earned on these FDs. If you are exempt from paying tax, you need to submit form 15G/H at the beginning of the financial year with the bank.
7) Tax-saving FDs can be opened through any public or private sector banks except co-operative banks and rural banks.
8) The Post Office term deposit of 5-year also qualifies for deduction under Section 80C.
9) Here are the interest rates offered by leading banks on 5-year tax-saving fixed deposits.
|Name of the bank||Annual interest rate|
|General public||Senior Citizens|
|State Bank of India||6.00%||6.50%|
|Source: ET Now Digital|
10) You can neither do premature withdrawal nor take a loan against tax-saving fixed deposits.
Source by timesnownews..Share: