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When you invest a portion of your income in a fixed deposit scheme, you have to keep the amount with the bank or a Non-Banking Financial Company. This is for a specified amount of time so you can receive the interest that accumulates. Although there are several types of investments, the fixed deposit is known as the most popular scheme. It’s preferred by Indians from all strata of society.
Investing in The Fixed Deposit Scheme
The risk-free factor is the most compelling aspect of fixed deposits. There are also the tax benefits that come with fixed deposits. The fixed deposit interest rate varies on the basis of type, amount, and tenure of the fixed deposit. Some of the most common schemes include senior citizens FD, fix deposit tax saving, FCNR deposits and more. Each of these deposits has different benefits. But the standard fixed deposits remain the most favoured. This is because a general fixed deposit scheme can be created easily and best way to invest your saving. You can enjoy a lot of flexibility from interest, span of the deposit and the amount you want to invest.
Features of The Fixed Deposit Scheme
The tax saving fixed deposit scheme offered by the banks and NBFCs can help you get more from your investments. You won’t be able to withdraw the amount before maturity or claim for loans. There are several features which can compel you to invest in fixed deposit scheme.
The minimum amount of investments in this type of account is as low as Rs. 100. You can invest as much as you want to in the multiples of 100 only.
The maximum amount of investment to get the fix deposit tax saving has been increased to Rs. 1,50,000. It has been increased from the previous allowance of Rs. 1 lakh only.
The FD interest rate would be same as what is quoted to you by the bank or the financial institution. You can open this account if you are a resident individual or hail from a Hindu Undivided Family.
If you have a joint account, the first holder will receive the fix tax benefits.
Tax Benefits Offered by Fixed Deposits
The Section 80C of the Income Tax Act of India is known by the name of tax saving fixed deposits. These accounts are offered by most banks so you can reap in tax benefits by investing your money in fixed deposits. The tax saving fixed deposits are devised so that you can open other plans as well. This includes the PPF or Public Provident Fund, NSC or National Savings Certificate and pension plans. When you invest in a suitable fixed deposit scheme, you can get a fix deposit tax benefits up to Rs. 1,50,000.
So this suggests that, under Section 80C of the Income Tax Act, you can save tax, irrespective of your individual revenue bracket. Thus, it has become one of the most opted deduction schemes by the tax-paying residents.
You can invest in a fixed deposit scheme at any point of time as this is open all through the year. This includes tax free bonds which are issued by the Government.
You can get the interest amount on the basis of the fixed deposit interest rate on a monthly or quarterly basis. Plus, if you are over 60 years, you can enjoy more benefits by submitting your age proof.
Some people think that fixed deposit scheme won’t earn them as much benefit as other avenues. It offers tax savings along with giving you a fixed amount on the basis of fixed deposit interest rate.