6 FAQs Related to Tax-Saving Fixed Deposit (FD)

Fixed deposit is a popular investment tool not only for its stability and high-interest rates but also for its tax-saving benefits. Here are some FAQs to help you gain more insight about tax-saver FD.

1. Who can invest in a tax-saving FD?

Indian citizens indicating HUFs, senior citizens, and even minor (having a joint account with an adult) can invest in tax-saving fixed deposit.

2. How much tax can you save?

According to Section 80C, IT Act, you can claim deductions of up to Rs.1.5 lakhs if you invest in a 5-year Tax-Saver FD.

3. Are they any risks involved in investing in tax-saving FD?

There are no risks and your finances are safe as long as you choose one with a good credit rating.

4. What is the minimum amount needed to open a tax-saving FD?

The minim amount is Rs.100 but varies from one financial institution to another.

5. What are the interest rates of FDs?

Interest rates are around 6%-8% but depend upon the issuer.

6. What is form 15G and 15H?

Form 15G and 15H are submitted to the financial institution requesting them not to deduct TDS if your total interest income is below the taxable limit (i.e., Rs.10000).

The biggest disadvantage of FD is that they come with a lock-in period of 5 years and you cannot use them as collateral to get quick finances. You can opt for Bajaj Finance FD to avail benefits such as flexible lock-in periods and, timely liquidity, and lucrative interest rates.

Also, Read This: Fixed Deposits: Are they tax-free? Know FAQs on tax saving

Which is the Best Investment Option? Fixed Deposit or Sukanya Samriddhi

Parents definitely look for investments to secure the future of their child. This may include the marriage expense of the girl child, studies, etc. Choosing the right investment option is always a matter of concern.

Sukanya Samriddhi Yojana and Fixed Deposits are considered as the best saving option for the children. Which is the best or better option? If the plan is to invest for the girl child, then both Sukanya Samriddhi Yojana and FD will be the most considerable options. Just go for proper research and find out the best one as per your needs.

Sukanya Samriddhi Yojana is restricted only to the girl child. It helps parents to build a corpus future of a girl child. This scheme is the best option to cover education and marriage expenses of the daughter. However, FD can be opened for any purpose. It is a saving scheme and an individual can invest lump sum money and get a secured return at a fixed tenor. An individual can easily pick the best one through a comparison based on the below factors:

Interest rate: Interest rates provided by Sukanya Samriddhi Yojana varies from 8-88.5% and FD provides 8.75 to 9.10%

Tenor: Sukanya Samriddhi Yojana is a saving scheme for a tenor of 21 years. FD, on the other hand, is flexible and can be liquidated in case of emergency.

Eligibility: Sukanya Samriddhi Yojana is eligible for girl child below 10 years of age. On the other hand, any Indian resident can open FD.

FD Calculator: How to Find Out the Maturity Amount

Planning to invest in a fixed deposit but not very sure about how your returns would be like? Knowing the maturity amount comes in handy while planning your financial goals. You know exactly how much you have, and how much more you would need to meet the financial goal. In short, you’ll be able to plan better and ensure sufficient funds when needed.

On that note, you can use the fixed deposit calculator and calculate your fixed deposit maturity amount quickly. The FD calculator is readily available and very easy to use. You can find out the exact maturity amount in a matter of seconds. All you need to do is fill the numbers correctly.

Here’s how you can use the FD calculator.

Step 1: Fill in the basic details

As said above, you have to share the numbers: the principal investment amount, the interest rate, and the investment tenor correctly to get precise results. Also, make sure you know the compounding frequency: the number of times interest is compounded in a given year; followed by the financial institution you are investing with. Some banks do it after every quarter, some do it three times a year, while some even do it on a yearly basis – just once a year.  

Step 2: Cross-check the details

You can straightaway hit the ‘calculate’ button after you are done with filling out the numbers. However, the aim is to obtain the precise result. Hence, cross-check the details, especially the compounding frequency and the interest rate before you hit the calculate button.       

To know more, Read: Documents Required for Fixed Deposit Investments