Opening a Fixed Deposit is an excellent way to earn interest rates instead of letting the funds sit idle in your Savings Accounts. FDs are a widely preferred investment option. They offer the possibility of assured returns and are considered a safe avenue to invest your funds.
Besides this, when you decide to open a Tax-Saving FD, you not only enjoy the benefit of better interest rates but also the tax benefits that come along with it. Let us understand the Tax-Saving FD better, along with its benefits.
About Tax-Saving FDs
Such FDs let you enjoy tax deductions under section 80C of the Tax Act of 1961. So, when you decide to open such a scheme, you can earn FD interest rates offered by your bank. Here, you can claim a tax exemption of a maximum of Rs. 1.5 lakh on the amount invested. Unlike other FDs, this FD provides a tax-saving feature.
Ways to open Tax-Saving FDs
Today, you can instantly open such FDs from anywhere and anytime through Online Banking facilities. The process also does not require any documentation. Instead, you just need a Savings Account with your preferred bank and sufficient balance to fund the FDs. Besides this, you can handle the Tax-Saving FD from anywhere using Online Banking mediums.
Features
The different characteristics of Tax-Saving FDs are:
- Eligibility criteria
Those who are from Hindu undivided families and resident individuals of 18 years or above can open a Tax-Saving FD. You can open such a Fixed Depositv individually or jointly. Usually, minors can also open an FD jointly with either of the parents. According to the FD rules, the income tax benefit can be availed of by the first FD holder.
- Lock-in period
Tax-Saving FDs come with a lock-in period of five years. However, you can remain invested for longer.
- Senior Citizen FD interest rates
When you open a Senior Citizen FD, banks typically provide them with a higher interest rate. This benefit is also available under a Tax-Saving FD.
- Nomination feature
You can nominate someone to handle a Tax-Saving FD in your absence.
- Deposit amount
When you open a Tax-Saving FD, check on the minimum deposit amount. This sum varies across banks. As for a Tax-Saving FD, the minimum deposit amount differs according to the chosen bank. However, the maximum amount is fixed at Rs.1.5 lakh.
Conclusion
Now that you know everything about a Tax-Saving FD, you can decide your investment goals and accordingly open one, either offline or online.
