Tax Saving FD: Along with tremendous returns in tax saving FD, there will be savings of lakhs in tax also...
If you are looking for an investment option in which you get good returns and also save tax, then consider that Tax Saving Fixed Deposit is made for you only. You can avail tax benefit of up to Rs 1.5 lakh annually under Section 80C of the Income Tax Act on the money invested in Tax Saver FD. At present, State Bank of India and PNB are offering 6.50 percent annual interest while HDFC Bank, ICICI Bank, and Axis Bank are offering 7 percent annual interest on this FD.
Yes, here it must be kept in mind that the benefit of this tax saving option will be available only to those people who will file RTR by choosing the option of the old tax system. Those choosing the new tax regime will not get tax exemption on investment in tax-saving FD. The money invested in tax-saving FD remains completely safe and you get guaranteed returns.
The lock-in period is 5 years
The lock-in period of tax saving FD is five years. This means that you cannot withdraw the amount invested in it before five years. If you break your FD before 5 years, the bank not only charges you a penalty but you also do not get tax benefits. In this situation, the entire amount of the year in which you break the FD will be added to your income on which you have availed income tax exemption. An overdraft facility is not available in this. In case of the death of the FD holder, the nominee has the option to withdraw the money before maturity.
There is no tax on tax-saving FD. But, if the interest earned on the invested money is more than Rs 40 thousand in a year, then tax will have to be paid. In the case of senior citizens, the exemption limit is up to Rs 50 thousand. On maturity, the bank will pay the remaining amount only after deducting TDS.
If the income is not taxable then you will have to fill Form 15H.
This FD is subject to the TDS rule. The interest earned on this deposit is taxable. However, if your income is not taxable, you can submit Form 15H/15G and the bank will not deduct TDS on your interest. Minors can also invest money in tax-saving FD.
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