Bytes - Your weekly dose of
investments, taxes, finance & more.

Making Managing Money Smarter & Taxes Less Taxing

New Video Every Friday

Blog

New ITR Forms out
for AY 2020-21

Here's what changed

Building Customer Focused Business

97% Customer Retention

95% CSAT

10x Annual Growth

previous arrow
next arrow
Slider

Tax Saving FD(Fixed Deposit): Features and Eligibility

author portrait

Hiral Vakil

Fixed Deposit
HUF
Section 80C

Tax saving FD (Fixed Deposit) a.k.a Tax saving Term Deposit are Fixed deposits with different maturity periods. To qualify for tax benefits, the lock-in period is 5 years.

The investment objective of term deposits is to provide tax benefits under section 80C of the Income tax Act. It aims at motivating individuals to save since it has the dual benefit of investment and tax saving.

Want to know what other tax deductions you can claim?
Read our article to understand the different types of tax deductions available to you and how to avail them.
Read More
Want to know what other tax deductions you can claim?
Read our article to understand the different types of tax deductions available to you and how to avail them.
Read More

Features of Tax Saving Fixed Deposit: 

Who can invest in Tax Saving Fixed Deposit?

All Resident individuals and Hindu Undivided Families are eligible to invest under Tax Saving Term deposits. Term deposit shall be of following types, namely:-

No nomination shall be made in respect of a term deposit applied for and held by or on behalf of a minor. In the case of joint holder type deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit. The interest earned is subject to tax deduction at source as per tax laws.

Ask an Expert (Income Tax)
Talk to an expert via call, whatsapp or messages. Ask questions about tax returns, applicability & compliance etc.
[Rated 4.8 stars by customers like you]
Ask an Expert (Income Tax)
Talk to an expert via call, whatsapp or messages. Ask questions about tax returns, applicability & compliance etc.
[Rated 4.8 stars by customers like you]

FAQs 

Is interest on FD taxable?

Yes. Interest earned on any kind of Fixed Deposit is taxable. TDS will be deducted @ 10% in case the total interest income from such deposits exceeds Rs. 10,000 in a year.

Can I withdraw from FD before maturity? 

No. As per Government notification, no premature withdrawal is allowed for the Tax-Saving FD

Is there a lock-in period for a tax saving FD?

Yes, the lock-in period is a minimum of 5 years.

Got Questions? Ask Away!

  1. Hey @sushil_verma

    There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

  2. Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

    For eg,

    • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
    • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
    • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

    Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

Continue the conversation on TaxQ&A

1 more reply

Participants

Close Bitnami banner
Bitnami