Tax Saving Bank Fixed Deposits as the name suggests are fixed deposit schemes that give you good returns and the returns are not taxed. However, this is applicable when you invest the stipulated amount and you can avail tax benefit for investments of up to only 1 lakh rupees. The tax saving bank fixed deposit has to be at least saved for five years.
You also get insurance of up to 1 lakh rupees for investments made under the tax saving fixed deposit under the Deposit Insurance & Credit Guarantee Scheme of India.
Apart from banks you can also apply for fixed deposits from co-operative banks and non-banking financial institutions (NBDC) like LIC and Shriram Transport Finance Company Ltd who offer FDs and some even offer better interest rates than the banks. However, make sure you invest in a fundamentally sound and reputed NBFC as some of them are gullible as well.
At the end of the maturity you will get the returns on your FD deposited to your savings account chosen by the duration you in the form of monthly or quarterly basis. If you wish to reinvest the amount, the same will be further invested and the returns will get the benefit of compound interest.
However, you have to keep in mind that apart from the longer tenure you cannot apply for a loan with the tax saving fixed deposit. So, in the medium to long term horizon of five years, if you are looking for a safe and income tax free way of getting good returns on your money, then the tax savings FD come in more than handy.
The FDs might not be giving a good return of 14 percent compared to the good old days but considering the income tax free returns, the tax saving FDs have surely built up some lost reputation that the FDs had once upon a time.
You can start with as little as 100 rupees and for senior citizens as always the returns are marginally higher based on the bank or NBFC you are investing the FD in. Lately, you also have a sweep in facility which again is not applicable to the tax saving FD and you cannot link it your savings account. You cannot also ask for the extra amount in your savings account to be moved to the tax savings FD and there is no overdraft benefit as well.
In case of a joint tax saving fixed deposit, the income tax rebate is applicable only to the first holder and not to both the holders as compared to normal fixed deposits.
Mostly the interest is calculated on a quarterly basis and returns are pooled back into the fixed deposit thereby increasing the principal amount every quarter. You also have tax savings FD which gives you monthly return but when compared to the former, the monthly returns FD will not be able to give you higher returns.
So if you are looking for higher returns than your savings or PF account returns and yet avoid taking the risk of investing in equities and also save tax, you can go for tax savings FD.
You also get insurance of up to 1 lakh rupees for investments made under the tax saving fixed deposit under the Deposit Insurance & Credit Guarantee Scheme of India.
Apart from banks you can also apply for fixed deposits from co-operative banks and non-banking financial institutions (NBDC) like LIC and Shriram Transport Finance Company Ltd who offer FDs and some even offer better interest rates than the banks. However, make sure you invest in a fundamentally sound and reputed NBFC as some of them are gullible as well.
At the end of the maturity you will get the returns on your FD deposited to your savings account chosen by the duration you in the form of monthly or quarterly basis. If you wish to reinvest the amount, the same will be further invested and the returns will get the benefit of compound interest.
However, you have to keep in mind that apart from the longer tenure you cannot apply for a loan with the tax saving fixed deposit. So, in the medium to long term horizon of five years, if you are looking for a safe and income tax free way of getting good returns on your money, then the tax savings FD come in more than handy.
The FDs might not be giving a good return of 14 percent compared to the good old days but considering the income tax free returns, the tax saving FDs have surely built up some lost reputation that the FDs had once upon a time.
You can start with as little as 100 rupees and for senior citizens as always the returns are marginally higher based on the bank or NBFC you are investing the FD in. Lately, you also have a sweep in facility which again is not applicable to the tax saving FD and you cannot link it your savings account. You cannot also ask for the extra amount in your savings account to be moved to the tax savings FD and there is no overdraft benefit as well.
In case of a joint tax saving fixed deposit, the income tax rebate is applicable only to the first holder and not to both the holders as compared to normal fixed deposits.
Mostly the interest is calculated on a quarterly basis and returns are pooled back into the fixed deposit thereby increasing the principal amount every quarter. You also have tax savings FD which gives you monthly return but when compared to the former, the monthly returns FD will not be able to give you higher returns.
So if you are looking for higher returns than your savings or PF account returns and yet avoid taking the risk of investing in equities and also save tax, you can go for tax savings FD.