Every time you enter the bank to open a deposit, you might be taken a back, when the bank talks about a term deposit, whereas you actually want to open a fixed deposit.
Is there a difference between term deposit and fixed deposit?
Actually, there is no difference between a term deposit and a fixed deposit. Both are one and the same. Most bankers tend to use the word term deposit.
Is there a difference between taxation for term deposit and fixed deposit?
Even when it comes to taxation, there is no difference between the two. For example, both a time deposit and a term deposit will attract a TDS, if the interest crosses Rs 10,000 each year. Of course, if you submit form 15G or form 15H, there would be no TDS liabilit.
Income earned through both the term deposit and fixed deposit is one and the same in terms of taxation. So, you would have to take the interest income and added to other income that you have before filing tax returns.
Why two terms for the same deposit?
Actually term deposit has been used, because you are placing the sum for a fixed term. These deposits could be placed for tenures from as small as 15 days, to as much as 10 years.
One difference between a term deposit and fixed deposit is that latter is more prominently used in bank deposits, whereas the former is used for company deposits.
So, which should you actually buy?
Since there is no difference between a term deposit and a fixed deposit, you can buy either. We recommend that if you are looking at slightly superior returns, in the context of falling interest rates, you look at company deposits with a solid rating.
Please also ensure that you plan your tax liability accordingly, given the fact that interest on both the term deposit and the fixed deposit is taxable.
As mentioned before there is no difference between both. For example, a banker uses the word term deposit, while an individual is more familiar with fixed deposits.