Tax Saving Fixed Deposit

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What is Tax Saving Fixed Deposit?
With Tax Saving Fixed Deposit, you can claim the
amount invested up to Rs. 1.50 Lakhs as a
deduction from your income. So, to
calculate your taxable income, you reduce
the amount of your Tax Saving FDs from
your total gross income and, that is how
you get your taxable income. The tax benefit
or deduction which you get for your tax
saving FDs is under Section 80C of the Income
Tax Act, 1961.
HOW TAX SAVING FDS ARE
DIFFERENT FROM REGULAR FDS? The only
additional benefit of a Tax Saving FD over a
regular FD is that the original amount you invest
in a Tax Saving FD is exempted from taxes. Also,
you can claim a tax deduction under Section 80C
of the Indian Income Tax Act, 1961 while filing
income tax returns. However, the interest income
that is generated from Tax Saving FDs is subject
to the same tax rules as any other regular
FD. Recommended Read Calculation of Income Tax
on FD and RD Interest !!! Also Read How to save
Money through SIP?
2
WHAT
ARE SCHEMES FOR FIXED DEPOSITS UNDER
SECTION 80C? Fixed Deposits schemed under
Section 80C of the Income Tax Act, 1961 are
named as Tax Saving Fixed Deposits. You
get tax deductions up to Rs.1.50 Lakhs
per year under Section 80C of the Income
Tax Act, irrespective of your tax bracket.
Also, Section 80C can be used to avail deductions
on a number of investments or expenditures such
as PPF, NSC, child education fees,
infrastructure bonds, pension funds, tax
saver fixed deposits, senior citizen savings
scheme (SCSS), unit linked insurance plans
(ULIP), life insurance premiums, home loan
principal, etc. Most relevant is that
Section 80C provides cumulative deductions up
to Rs.1.50 lakhs per year from all investments in
relevant instruments.
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• FEATURES OF TAX SAVING FDS
• Major features of Tax Saving FDs are
• Fixed maturity of 5 years.
• Minimum investment must be Rs.100. Further,
  investments can be made in multiples of
  Rs.100 only. This limit may vary from bank to
  bank.
• The maximum limit of investments Rs.1.50 Lakhs.
• Interest rate will be as per your bank or
  financial institution.
• Individuals including senior citizens and NRIs
  and Hindu Unified Families (HUF) can open this
  account.
• In case of joint accounts, only the first holder
  will get tax deductions as per the section 80C of
  the Income Tax Act, 1961.
• Premature withdrawal is not allowed.
• You cannot avail loan against your tax saving
  fixed deposits.
• Your interest from FDs are taxable. TDS is
  charged at 10 pa, if you have given your PAN
  details to your bank, else TDS will be charged at
  20 pa.
• Recommended Read Calculation of Income Tax
  Deduction on FD and RD Interest !!! Also Read
  Which Banks offer Higher Rate of Interest on
  Deposits in India?

BENEFITS OF INVESTING IN TAX SAVING FDS Tax
saving FDs come with lot of benefits. You can get
more out of your investments through Tax
Saving FDs. Though, there are a few
limitations as well, such as you cannot
withdraw premature and you cant avail loan
against it, etc. However, at the same time, there
are many benefit from the same
The major benefit of investing in tax
saving fixed
?
deposit is that it helps you save income tax.
Open throughout the year unlike, tax free
bonds
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issued by the government from time to time.
You can start investing with as little as
Rs.100 and
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add to your savings.
Also, you can avail a tax benefit on amount
invested
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up to Rs.1.50 Lakhs per year.
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• You can take advantage of interest paid out on
  monthly or quarterly basis.
• Special rates are available for senior citizens,
  depending on bank.
• Secure investments for the medium term.
• Since, premature withdrawal is not available in
  case of tax saver fixed deposits, you can
  be sure of receiving assured returns, apart
  from saving tax.
• Also, nomination facility is available. You can
  nominate or authorize someone to withdraw your
  deposit before or post maturity in the event of
  your death.
• And, Tax saving fixed deposits may not
  earn you as high as some other tax saving
  investment avenues such as tax saving mutual
  funds or insurance policies, these will
  ensure that you have a peace of
  mind while investing your hard-earned savings,
  and get assured pay- outs at regular intervals

• ELIGIBILITY TO OPEN A TAX SAVING FD?
• All resident individuals who have a pan card.
• Nonresident Indians (NRIs).
• Senior citizens above 60 years of age.
• Sbi Account Balance Check Online

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