Strategy for investing in a tax saving fixed deposit account
Is tax saver FD a good investment?
A tax-saving fixed deposit is a type of fixed deposit that extends tax deductions under Section 80C of the Income Tax Act, 1961. Investors can claim a tax deduction of up to Rs 1.5 lakh per annum through this instrument. Additionally, it is important to note that these fixed deposits are the same as any other bank FD.
How much should I invest in tax saving FD?
The minimum investment that can be made in a tax-saving fixed deposit is Rs 100, whereas the maximum limit is Rs 1.5 lakh per financial year.
Which option is best for tax saving?
Best Tax-Saving Investments Under Section 80C
| Investment | Returns | Lock-in Period |
|---|---|---|
| National Pension Scheme (NPS) | 9% to 12% | Till Retirement |
| Unit Linked Insurance Plan (ULIP) | Returns vary from plan to plan | 5 years |
| Public Provident Fund (PPF) | 7.1% currently | 15 years |
| Sukanya Samriddhi Yojana | 7.60% | 21 years |
Which bank is best for tax Saver Fixed Deposit?
The minimum tenure for a term deposit under Tax Saving Scheme is 5 years.
Top 10 Tax Saving Fixed Deposit Schemes in India.
| Bank | Interest Rates (Regular Public) | Interest Rate (Senior Citizens) |
|---|---|---|
| State Bank of India | 5.40% | 5.90% |
| Kotak Mahindra Bank | 5.30% | 5.80% |
| HDFC Bank | 5.30% | 5.80% |
| Punjab National Bank | 5.25% | 5.95% |
Can I get monthly interest on tax saving FD?
The interest payment can be received monthly, quarterly, half-yearly, annually or as a cumulative option. The term of the deposit in tax saving FD is 5-years and deposits cannot be withdrawn before the end of the term.
Can tax saver FD be closed?
Pre-mature closure of e-TDR/e-STDR under tax saving scheme is not allowed during the lock-in period. After 5 years, you may close it through your home branch only. In case of death of depositor, legal heir of depositor may pre-maturely close it through home branch only.
What is the difference between tax saver FD and normal FD?
Tax saver term deposits come with a lock-in period of up to 5 years, while for normal FDs the tenure ranges from 7 days to 10 years. Regular FDs do not provide tax benefits and only tax saver FDs provide tax benefits. With a tax saver FD, depositors can claim a deduction of up to Rs.