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5 FD rules and regulations you should be aware of

By Finserv MARKETS - Aug 26,2019
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5 FD rules and regulations you should be aware of

Fixed deposits have turned out to be a popular investment choice as they offer a host of benefits such as high interest rates, financial security, and liquidity, among others. Besides, FD accounts in India also attract tax deduction under Section 80C of the Income Tax Act.

Due to these features, fixed deposits are a safe and secure way of investing money as it not affected by market-related fluctuations. FDs are a good option for anyone who wants to diversify their investment and gain high returns with assured stability.

Before you think of starting your fixed deposit on Finserv MARKETS, it is essential to look at the rules that govern it. Here are five rules and regulations on fixed deposits that you should be aware of before investing in one.

1. Tax on FD interest

As per the current governing laws in India, the interest earned on FD accounts are fully taxable. The interest is charged according to the slab rate, which applies to your total taxable income.

For example, if your total taxable income for the financial year 2019-2020 is Rs 10 lakh, then you will be taxed at 20 percent on the interest earned on your fixed deposit. Please note that the income tax slab rate for taxable income stands at Rs 10 lakh.

2. TDS on FDs

Tax Deducted at Source (TDS) is applied to the interest earned on your fixed deposit. It is paid on your behalf by the bank at the time when the interest is credited to your bank account, and not at the time when the policy attains maturity.

For example, if the amount saved in your fixed deposit exceeds Rs 40,000, TDS is deducted at the rate of ten percent if PAN information is provided; otherwise, it is levied at 20 percent.

If there happens to be any surplus or deficit on the TDS paid on your fixed deposit interest, then the difference is receivable or payable by you.

However, no TDS applies to Post Office Term Deposits — individuals who have a post office fixed deposit need to declare the interest they have earned on their FD at the time of filing their income tax returns.

3. Tax exemption for senior citizens

For senior citizens — individuals who are aged sixty years or more — no TDS is applicable if the interest on their fixed deposit account does not exceed Rs 50,000.

4. Tax benefits

Under Section 80C of the Income Tax Act, FD accounts that are opened for a fixed period of five years qualify for a tax deduction of up to Rs. 1.5 lakh. If you decide to withdraw money from these accounts prematurely, then the FD may attract penalty charges.

5. Additional tax benefits

According to Section 80TTB of the Income Tax Act, senior citizens can claim a deduction amounting to Rs 50,000 on the interest they earn on their fixed deposit accounts. This feature, along with a higher rate of interest, makes fixed deposits a perfect choice for older people, or for youngsters who want to open a fixed deposit for their parents so that they have a fixed source of income when they grow older and retire.

Conclusion

Fixed deposits on Finserv MARKETS let you make the best out of your savings by offering attractive returns. The process of applying for a fixed deposit account on Finserv MARKETS is quite easy. All you have to do is to input your necessary details such as name and phone number, choose the type of fixed deposit, upload a few documents to complete the Know Your Customer (KYC) process, and finally make the payment to activate the account.

You can choose an investment period which ranges from 12 months to 5 years for your FDs on Finserv MARKETS. These fixed deposits offer a high interest rate of up to 8.95 percent, making it the perfect financial instrument for your savings.

With a stable ICRA MAAA and CRISIL FAAA rating, fixed deposits on Finserv MARKETS are free from market-related fluctuations, guaranteeing you high and stable returns throughout.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522