Tax saving fixed deposits are a famous investment option on which investors can claim tax deduction of up to Rs 1.5 lakh under section 80C of the Income Tax Act 1961. Tax saving FDs have a lock-in period of 5 years, on which a pre-fixed rate of interest is paid.
Tax saving FD: Amid the uncertainty prevailing in the stock market for the last five months, most investors have withdrawn their money from equity. The reason behind this is huge losses and they are looking for safe investment options. In such a situation, tax saving FD can prove to be an excellent investment option for investors. They can avail good returns as well as tax deduction on this. Tax saving FD schemes offer predetermined interest, due to which there is no tension of any kind of risk on investment.
You can save Rs 1.5 lakh under Section 80C
Tax saving fixed deposits are a famous investment option on which investors can claim tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act 1961. Tax saving FDs have a lock-in period of 5 years, on which a pre-determined interest rate is paid. In such a situation, for those who are looking for a low-risk tax deduction investment option, this is the best option and also provides financial security.
TDS on interest
Let us tell you that senior citizens get the benefit of additional interest rate, which is usually 0.5% more than the regular rates. In such a situation, it becomes an attractive investment option for retired people. If senior citizens are earning more than Rs 50,000 from tax in a financial year, then they will have to pay 10% TDS. At the same time, if the customer has not submitted his PAN card, then this deduction becomes 20%. However, if the investor’s total income is less than the taxable limit, then they can avoid TDS deduction by filling Form 15/15H.
No option of auto renewal on tax saving FD
It is known that there is no option of auto-renewal on tax saving FD. Once the period of the invested money is over, investors have to withdraw or reinvest it. Since interest is taxable, investors should consider their options before taking an investment decision and should also explore other tax saving options.
Annual return up to 8%
It is worth noting that at present HDFC Bank is offering an annual interest of 7.50% to its customers on tax saving FD, while Axis Bank is offering an annual return of 7.75%. After this, Federal Bank is offering an annual return of 7.60%, ICICI Bank 7.5%, Yes Bank 8%, RBL Bank 7.60%, IndusInd Bank 7.75% and DCB Bank 7.90%.
