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 on investment.
There is a search for different options to save income tax. But, most people are looking for safe and good return instruments. Therefore the best or safe 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 on investment.
What is tax saving FD?
The 5-year Fixed Deposit is called Tax Saving FD. It is invested for 5 years (long term). All private and public sector banks in the country provide tax saving FD facility.
Features of Tax Saving FD
Individuals and Hindu Undivided Family (HUF) get tax exemption on investment in Tax Saving FD.
FD is done for at least 5 years.
Prior to maturity, loans on withdrawal and FD are not available in this category.
Investments made for 5 years are tax-exempt under Section 80C of the Income Tax Act.
Post office FD can be transferred from one post to another.
FD can be done in single or joint holding. If joint holding is there, only the first holder will get the benefit of tax exemption.
The interest on 5 years FD is not tax free and TDS is deducted by adding it to the investor’s income.
Interest on deposit is available on monthly / quarterly basis.
The lock-in period of 5-year FD also stays for 5 years.
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