There are different options for saving income tax. But, most of the people are looking for safe and good returns instrument. Therefore the best or safest option is Fixed Deposit. You can invest in it for tax saving. In this, tax exemption can be taken on investment up to Rs 1.5 lakh under Section 80C of the Income Tax Act. The biggest feature of FD is that it gives assured returns along with safe investment. But, do you know that there are many other benefits of investing in FD as well. Let us know about your work…
1. Benefit of Guaranteed Returns
Guaranteed returns are available in FD. At the very beginning of the investment, it is known that how much profit will be made in it on maturity.
2. Benefit of Tax Exemption
Tax saving benefits are available in fixed deposits. However, this benefit is not available on all fixed deposits. Income tax exemption is available on FD for 5 years. There is no tax to be paid on the deposit amount as well as interest.
3. Loan Against FD Benefits
Loan against FD is also available. The good thing is that the loan can be repaid according to your convenience. Loan can be availed up to 90% of the total value of FD. The loan interest rate on FD is 1-2% higher than the interest you get on your investment. This means that if you are getting 4% interest on FD, then you can get the loan at 6% interest.
4. Benefit of Pre-Maturity Withdrawal
Liquidity also comes with FDs. If needed, you can withdraw even before maturity. However, the bank may charge you some charges for doing so.
5. Benefits of Health Insurance
HDFC Bank, ICICI Bank and DCB Bank are offering insurance with Fixed Deposit to the customers. Health insurance can also be available for free on making FD in these banks.
6. Advantages of Credit Card Against FD
Most banks offer credit cards against Fixed Deposit (FD). Credit cards are available with a credit limit of 80-85% of the FD amount. People with low credit score or no credit history can take advantage of this offer. FD is used to protect credit card expenses.
7. Benefit of guarantee up to 5 lakhs
Fixed deposit is a safe investment though, but if the bank sinks under any circumstances, then your money invested in FD as a government guarantee up to Rs 5 lakh will be safe. You will get back up to Rs 5 lakh in bank default case.
