Tax-saving FDs: The tax deadline is just a week away and most of us are looking for tax-saving investments at this peak time. There are myriads of options but Fixed deposits is one of the best options for taxpayers to save their hard-earned money. Investing in fixed deposits not only saves taxes but also provides you money security on your investment. A person can claim an income tax deduction by investing in 5-year fixed deposits scheme under the section 80C of the income tax act 1961.

Tax-saving fixed deposits (FD) account details:

Tax-saving FDs are one of the types of fixed deposits that gives a tax saving benefit or tax deduction onder section 80 C of the income tax Act. These investments can be made using one of the two types of accounts: Single-holder account and join-holder account. Investor can avail deduction of up to Rs1.5lakh per year by investing in a tax-saving fixed deposit account.

Special features:

• A 5-year lock-in period
• Earned interest is taxed
• interest rate ranges from 5.5% to 7.75%

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Benefits:

• FD schemes offer a higher rate of interest compared to Saving accounts.
• It is one-time lumpsum deposit
• TDS is levied on the interest on fixed deposits
• the minimum period needed to get tax benefits is 5 years. It can be however, extended for longer period of time.
• Investors have option to select flexible schemes according to thier convenience.
• Investors can claim income tax deduction of upto Rs1.5L per year under section 80C of the income tax Act.
• Facility of withdrawal before its maturity

Required documents details:

PAN, Aadhar, Driving License, and other forms of identification are acceptable. Address proof may be a telephone/electricity bill, ration card, bank statement with a check, and so on.

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FDs v/s other tax-saving investments:

Besides FDs, there are many tax-saving investment schemes that can help saving tax and develop property as ELSS tax-saving mutual fund, PPF, NSC, etc. fixed deposits are considered as one of the most safest saving options, providing capital security and growth while avoiding market’s risks.

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