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How to Save Tax With Tax Saver Fixed Deposits From Banks?

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As fixed deposits are one of the popular investment avenues for Indians, it is considered safe and regular interest-bearing instrument.

In addition to bank deposits, many banks offer tax saver fixed deposits which will help you save tax and under 80C of Income Tax Act.

Individuals, members of Hindu undivided family (HUF), senior citizens and NRIs are eligible to open tax saver fixed deposits.

How to Save Tax With Tax Saver Fixed Deposits From Banks?
 

Tax Saver Fixed Deposits

Tax-Saver Fixed Deposit provides you with dual benefits of tax exemption u/s 80C of the Income Tax and higher and safe returns on your investments.

The maximum amount eligible under a tax saver fixed deposit is Rs. 150,000 for a financial year.

The tax saver fixed deposit is locked in for the tenure of 5 years. The amount can't be used or pledgeD for any purpose. Such products will not have sweep-in facilities as well.

Interest rates

The current prevailing interest rates will be applicable on a tax saver fixed deposit and senior citizens will be eligible for higher interest rates as applicable.

TDS is applicable

TDS is applicable on the interest income which exceeds Rs 10,000 in a financial year. Banks are required to deduct 10 per cent as TDS. Make sure you update the PAN in your account or else 20 per cent TDS is applicable in such cases.

One can also apply for exemption on TDS if total income does not fall within the taxable limit. This can be done by submitting the form as per Income Tax Act.

GoodReturns.in

Read more about: fixed deposits tax tds
Story first published: Thursday, October 22, 2015, 11:01 [IST]
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