Tax Saver Fixed Deposit
One of the most popular and oldest forms of saving money is Fixed deposit. If a person is looking for a safe and easy option to invest for saving the tax then fixed deposit can be one of the effective options. The Fixed Deposit schemes are offered by various banks at multiple interest rates to choose from. Apart from the banks the persons investing in the Post office fixed deposit schemes are also eligible to get deductions under the income tax act. The safety and assurance of the fixed rate of return from this scheme makes it one of the most preferred options.
Investing in Fixed Deposit is a very easy task if you want to take a fixed deposit in the same branch where your account is already opened then you can simply get a FD(Fixed Deposit) in half an hour or in case you have access to internet banking then you can simply do it by while sitting at your home.
Fixed Deposit is a debt instrument scheme that allows the investor the tax benefit under the section 80C. Along with tax benefit under Section 80 C, this scheme also offers the benefit of smallest lock in period of 5 years and a periodic interest pay out option. The other schemes of post office like the Five-year NSCs do offer the tax benefit under Section 80C tax benefit but do not offer the regular periodic interest income. Thus, out of the all the available option FD is one of the most safe, feasible and liquid option.
There are certain things that needs to be remembered before heading forward with blocking your money under the fixed deposit schemes. Some of these things include the following-
- The fixed deposit amount should be withdrawn at the time of maturity only the mid-term withdrawal is not eligible for deduction under section 80 C.
- The scheme of post office are also eligible for tax saver options under income tax act.
- The maximum amount of investment eligible for the deduction under this scheme is 1.5 lakh in a financial year and the time for FD must be 5 years.
- The interest amount earned from the FD is taxable according to the investor’s tax bracket and the Tax Deducted at Source is also applicable and deducted.
- A person can have a nominee for his fixed deposit who will receive the money after maturity in case of death of the person.
- One more important thing to note is that the rate of interest for the fixed deposit made by senior citizens is eligible for slightly higher interest rates than the general ones. Usually all the banks offers high interest rates for FD applied by senior citizens as compared to regular citizens.
Thus, Fixed Deposit is a save tax saving debt scheme by you can lock in your money for a specified time period and safe your money.