A tax-saving Fixed Deposit will be the most favorable option if you are looking to invest in a tax-saving avenue which comes with minimal risks. A Fixed Deposit is well known for its safety and assurance and when you realize that a Fixed Deposit investment does not just offer guaranteed returns but also tax saving benefit, the faith in this investment arena grows more.
A tax-saving FD is one of the components where one can invest in order to save tax as per the section 80C of the Income Tax (IT) Act. A Fixed Deposit investment can be made easily, for that, an investor can visit any Non-Banking Financial Companies (NBFCs), banks and other lenders who are providing these services. However, make sure that when making an investment, financial institutions are highly certified and recognized.
Investing in the Fixed Deposit is even easier when you are looking forward to investing in the same financial institution. As for the normal investment, you are required to fill a form and give a cheque. Apart from that, the transferring of funds can be done within 20 minutes if the accounts are in the same branch. So the entire process of securing an FD would take no less than 30 minutes, depending upon the management and efficiency of the lender.
Furthermore, with the development of technology, one can also resort to online methods where you have access through net banking. This offers comfort and convenience. It is important to know that tax saving FDs is more save than Equity-Based Tax Saving avenues (ELSS) schemes. Additionally, the returns on Tax Saving Fixed Deposit are guaranteed by the lender.
Tax saving is one of the investment areas which more and more people tend to explore every year. They want to make the most out of Section 80C of the Income Tax Act. Here are certain things that you must know about Tax saving FDs:
- Tax Saving Fixed Deposits can be availed only by Hindu Undivided Family (HUF). The service is not available for everyone and is pretty specific. Thus, investment can be made only if you belong to HUF.
- The Tax Saving Fixed Deposits offered by the financial institutions differ from one another. Thus, the rate of interest, the amount involved and the tenure is different from lender to lender. The tax saving FD scheme is not generalized.
- In a Tax saving Fixed Deposit, the investment made is locked in for a period of 5 years.
- It is important to know that you can also invest in Post Office Time Deposit as it too qualifies for a tax deduction.
- Furthermore, Post Office FD can be transferred from a particular post office to the other.
- As an investor, you can hold these Fixed Deposits in two modes of holding – Single and Joint.
- The interest saving FDs qualify for nomination facility.
- Senior citizens are offered with a higher rate of interest than normal investors.
These are few of the points which are essential for you to know before you opt to invest in Fixed Deposit. These will help you invest your money in a much better and an efficient way. Furthermore, you will be able to save a decent amount of money through it.