Many people recommend investing in mutual funds or other places instead of getting FDs. But if you want guaranteed returns on your money, then FD is a better option. In this not only interest is available but there are many benefits together.
Investment Tips: FD is one of the most popular investment medium for investment in the country. Most of the people prefer investing in FD. One of the main reasons for this is its safety and interest is also available. Many people recommend investing in mutual funds or other places instead of getting FDs. But if you want guaranteed returns on your money, then FD is a better option. In this not only interest is available but there are many benefits together.
What are the benefits available on FD, understand in detail..
Loan or overdraft
FD is like a guarantee. Therefore, in lieu of this, many banks offer overdraft facility on the basis of FD. This means that if you are unable to repay the loan, then the loan money will be deducted from the amount deposited in your FD. If you compare FD with any other investment, then keep in mind that you can get loan against FD.
Insurance cover
If you have made an FD in any bank, then you get insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) on it. If your bank defaults or becomes insolvent, then you will get up to Rs 5 lakh under this insurance cover. This will include both principal and interest. This means that you will definitely get a guarantee. There will also be a guarantee of getting back up to Rs 5 lakh.
Tax benefit
If you make an FD for 5 years or more, then you can claim tax exemption on it under Section 80C of the Income Tax Act, 1961. Under this, you can take tax exemption up to Rs 1.5 lakh in a year. On the other hand, if you make an FD of less than 5 years, then you will have to pay tax. If the interest received from all the banks in a year exceeds 40 thousand rupees, then it will also be taxed.
Free life insurance
There are many such banks, which offer the additional benefit of free life insurance on getting an FD. Banks give such offer so that they can attract more and more people towards FD. Under this, they offer life insurance equivalent to the FD amount to their customers. There is also an age limit in this.
