Tax Saving FD Scheme: You will see tremendous benefits in the Tax Saving FD Scheme with a lock-in period of 5 years. So let’s know why this is a great scheme.
Tax Saving FD Scheme: If you are looking for better returns, risk free investment and income tax saving scheme then fixed deposit is good. As such, fixed deposits can be made anywhere and in any way. But, if you do it after planning and also get tax exemption on good returns, then it is a double benefit. You will see tremendous benefits in the Tax Saving FD Scheme with a lock-in period of 5 years. So let’s know why this is a great scheme.
Why is Tax Saving FD Scheme a good investment?
Tax saving as the name suggests… So it is clear that income tax exemption will be available in this. Actually, the returns you will get in the lock-in period of 5 years will be tax free. However, only interest up to Rs 40,000 in a year is tax free. According to the Income Tax Act 1961, tax exemption will be available under section 80C. Investment up to Rs 150000 in every financial year will be completely tax free. There is no risk because, there is a guarantee of the government on Fixed Deposit. Fixed deposit can be made in any government or private bank. At the same time, the post office also has the facility of getting tax saving FD.
Where is getting how much FD Interest Rate?
- Bank of Baroda: 6.10%
- SBI: 6.25%
- PNB: 6.10%
- Canara Bank: 6.50%
- Union Bank: 6.70%
- Indian Overseas Bank: 6.50%
- Post Office TD: 6.70%
- HDFC Bank: 7.00%
- ICICI Bank: 7.00%
- Axis Bank: 6.10%
- IndusInd Bank: 7.00%
- Kotak Bank: 6.20%
- Yes Bank: 6.75%
- DCB Bank: 7.25%
- RBL Bank: 6.55%
- IDFC Bank: 6.50%
(Source: Interest rates are taken from the website of all banks)
Note: Senior citizens get 50 basis points more interest on tax saving FD than a normal investor. This is applicable in most of the banks.
Lock in period in Tax Saving FD Scheme
Tax saving FD scheme is for 5 years. Your money remains locked in these 60 months. There is no exemption to withdraw money before 5 years i.e. maturity. In case of death of the FD holder, the nominee is allowed to withdraw the money before maturity.
Return limit fixed, TDS will be deducted if it is exceeded
There is no tax on tax saving FD. But, if the interest earned on the invested money exceeds Rs 40,000 in a year, then tax will have to be paid. In the case of senior citizens, the exemption limit is up to Rs 50,000. On maturity, the bank will pay the balance after deducting TDS.
Tax Saving FD Benefits
– Tax exemption in section 80C of Income Tax
– Rebate on investment up to Rs 1.50 lakh in a year
– Interest rate fixed for 5 years, no risk
– Nominee facility
– 0.50% more interest to senior citizens
– FD break before maturity and No auto-renewal facility
If you want to invest in Tax Saving FD then these documents are required
- ID Proof (Aadhar Card, PAN, Driving License, Passport)
- Address Proof (Aadhar Card, Utility Bill, Ration Card, Voter ID Card, Driving License, Passport)
- Signature Proof (Passport or Driving License)
- 2 Passport Size Photographs
