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Tax-saving FD FAQs

 

Who should invest in tax­-saving FD?

Anyone looking for a shorter lock­-in period and seeking a guaranteed return tax­-saving option should invest in these fixed deposits.

How can I open a tax­-saving FD?

Investing in a tax­-saving fixed deposit is very easy. You can open an account online or at a bank branch. Different banks offer different interest rates on tax­-saving FDs, so it is best to compare rates before you make an investment.

Is tax­-saving FD risky?

Tax­ saving fixed deposits are risk­free. The amount you invest in it is completely protected and the returns are also guaranteed.

What is the tax­-saving FD interest rate?

Tax­-saving fixed deposits have a fixed interest rate that remains the same throughout the 5­ year tenure. The interest rates for Indian citizens, HUFs and NRIs vary from bank to bank and begin from around 8 per cent. Senior citizens and bank staff members are offered higher interest rates. The interest is taxable, deducted at source, and added to your income.

What is the tax­-saving FD investment limit?

The minimum investment that can be made in a tax­-saving fixed deposit is Rs 100 while the maximum is Rs 1.5 lakh in a year.

What are the tax benefits of these FDs?

The amount invested in a tax­-saving fixed deposit is eligible for tax exemption under Section 80C. This amount can be a maximum of Rs 1.5 lakh a year. In case of joint holders, the tax benefit is available to only the first holder.

What is the tenure of a tax­-saving FD?

Tax­-saving fixed deposits have a lock­-in period of 5 years. No premature withdrawals, loans or overdraft facilities are available against tax­-saving FDs.

Who can invest in tax­-saving FD?

Indian citizens, senior citizens, HUFs and NRIs can invest in tax­-saving fixed deposits.

What happens upon maturity of tax­-saving FD?

When the fixed deposit term ends, the money comes back to your bank account.

Anything else I should know?

Tax­-saving fixed deposits offer a nomination facility. A tax­-saving FD can be transferred from one bank branch to another.

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