Of course, as is the case with bank deposits, you can submit form 15G or form 15H, if you wish the company not to deduct tax at source.
Form 15G or 15H, as the case maybe depending on whether your a senior citizen is submitted when you do not wish the company should cut tax.
It's best to spread your fixed deposits over several companies if you wish that no TDS is to be deducted and do not wish to submit form 15G and 15H.
Say for example, you have deposited Rs 1.5 lakhs in company A, which offers an interest rate of 10 per cent. Now, the annual interest payable by the company would be 15,000 and since this amount is over the threshold limit of Rs 5000, the company will deduct a TDS of 10 per cent.
Now, if you spread the deposit as Rs 50,000 each across three different companies, then you would earn an interest of Rs 5000 from the three companies and there would be no tax deducted at source.
Spreading the deposit over three companies would also ensure that you spread your risk. Remember, that company fixed deposits are not secure deposits and hence if there is a default in timely payment of interest and principal, you could lose your hard earned money.
So, putting in multiple deposits spreads the tax liability and also the risk.
What are company deposits?
Investors deposit their money with companies for a fixed period carrying a prescribed rate of interest is called Company deposits. Under company deposits, Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits.
Company deposits are a good invsetment for senior citizen investors as they give them secured returns, which are 1 percent to 3 percent more than the interest rates being offered by banks for related terms or sessions.
Several companies have fixed deposit schemes which are having an option to pay interest at monthly or periodic intervals, and investors find their very attractive to increase their regular income from pension, etc.
The target for the company fixed deposit schemes is senior citizens, housewives, individuals in zero or low tax bracket. There are some features of the corporate fixed deposit gives customers a multiple of that are meant to make their investments safe and profit.