How to Save Tax with Fixed Deposit – Schemes and Interest Rates
Fixed deposits are safe as they do not expose your investments to market risks. Now, you can also save taxes with fixed deposits by investing in tax-saving FDs. On investing in a tax-saving FD, you get a fixed deposit income tax exemption of up to Rs. 1.5 lakhs per year as per section 80C of the Income Tax Act, 1961. Also, an additional FD interest rate is offered to senior citizens.
You cannot deposit more than 1.5 lakh per year in a tax saving FD. The deposit tenor can be set from 5 to 10 years as per your convenience. Also, you cannot withdraw your deposits prematurely before the completion of 5 years. The fixed deposit account can be held jointly as well but the benefit of tax deduction is only applicable to the primary account holder.
The interest earnings are fully taxable if your interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) in a financial year. Also, the interest rate offered by the tax-saving FDs differs from bank to bank. Therefore, your actual earnings will still depend on the interest rate that will be applicable to your deposits.
If you want to earn substantial income from your fixed deposits then you can focus on fixed deposits plans that come with a high-interest rate. The FDs offered by the Bajaj Finance FD scheme will allow your deposits to grow at an interest rate of up to 7.25%. It means that your deposits will grow by at least 1.5% to 2% more swiftly than regular bank FDs. This FD scheme comes with the following features that would help to grow your interest income:
Additional FD rate to senior citizens
By investing in the Bajaj Finance FD scheme, the senior citizens can grow their deposits at a 0.25% higher interest rate than others. Also, this higher interest rate will be applicable irrespective of whether they invest in cumulative or non-cumulative fixed deposit plans.
The option of withdrawing the accrued interest periodically offered by non-cumulative FDs enables them to generate an interest income after every month, quarter, six months, or year as per their financial needs.
Excess FD rate to online investors
If you are an online investor i.e. you invest in any of its FD plans by filling and submitting an online FD form, then you will be eligible for a 0.10% higher interest rate. This higher interest rate will help you to earn better returns at maturity.
The entire process can be completed online as the document verification can also be done online by providing the CKYC number. A flexible tenor range between 12 and 60 months can be chosen and you can opt to withdraw your deposits prematurely on the condition that your deposits have completed 3 months from the date of deposit.
Collateral-free loans against FDs
Loans against FDs can be availed in case of financial emergencies. Moreover, you can apply for these loans without any collateral and the loan amount can be up to 75% of your FD value. As a result, you don’t have to withdraw your FDs and lose any interest income that you would not get in case you withdraw your deposits prematurely or before tenor completion.
Apart from these useful features and benefits, your fixed deposits will remain safe as the Bajaj Finance FD scheme has been accredited by credit rating agencies like ICRA and CRISIL for being a highly stable and safe investment alternative to investors.
To grow your interest income you can try to save as much tax as you can. A tax-saving FD provides a tax exemption of up to Rs. 1.5 lakhs every year. However, you will not be able to withdraw your deposits before 5 years and only up to Rs. 1.5 lakhs can be deposited every financial year. To get sizable returns from an FD, you can instead search for a high-paying FD scheme. For instance, the Bajaj Finance FD scheme offers an interest rate of up to 7.25%. Apart from the high-interest rates, you will also benefit from the flexible tenor that ranges from 12 to 50 months, easy liquidity options, and features like loan against FD. Also, a 0.25% higher FD rate offered to senior citizens and 0.10% additional FD rate provided to online investors can help you to receive higher gains at maturity.