What are Tax Saver Fixed Deposits?
Tax Saver Fixed Deposits are a type of fixed deposits in which the depositor can claim a tax deduction under Section 80C of the Indian Income Tax, 1961. These deposits can be made through two types of accounts, namely; Single holder Type Deposits and Joint holder Type Deposits. If you opt for a joint mode of holding, the tax benefit is only available to the first holder. The maturity period of the tax saver fixed deposit is 5 years. Deduction under section 80C is available to the Hindu Undivided Family (HUF) and individuals. Even senior citizens and NRIs can claim this tax deduction. It should be noted that the interest that you earn from this fixed deposit is not tax deductible and you cannot avail a loan against the same. The interest on tax saver fixed deposit can either be reinvested or is receivable on a monthly or quarterly basis.
You can choose either a public sector or a private sector bank to create your tax saver fixed deposit. But you cannot do so in rural or co-operative banks. The banks also generally provide a higher interest rate to senior citizens on the tax saver fixed deposits. The mutual funds which are tax saving are known as Equity Linked Saving Scheme.
Why you should opt for a Tax Saver Fixed Deposit?
Tax Saver Fixed Deposit provides you the facility of choosing a nominee who can withdraw your deposit pre or post maturity in case of the event of your death.
As the name suggests, tax saver FDs allow you to get a deduction on tax which is why it is a highly popular tax saving instrument, especially in India.
The minimum amount to be invested varies from bank to bank.
Apart from tax deduction, there is one more difference that tax saver deposits have from regular FDs and RDs.
Unlike regular FDs, you cannot do premature withdrawal from tax saver FDs.
Therefore, not only do you save tax but you can also be assured of availing fixed returns.
You can also visit YES BANK's website to know more about their Savings Account, Fixed Deposit and Personal Loan.