Tax-saving Fixed Deposit-All you need to know! | HDFC Securities
FDS are traditionally deemed as secure instruments that generate safe, fixed returns, while protecting you against market volatility. Today, Indians can also invest in tax-savings FDs that offer a world of benefits.
Tax-saving Fixed Deposits comes with a five-year lock-in period. Such FDs also qualify for tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. You can open the FD with a low minimum deposit and use it as a tool to create a corpus. Individuals and HUFs can open these FDs individually or jointly.
For senior citizens, most banks offer a slightly higher interest rate on such FDs. However, tax deducted at source (TDS) is applicable on the interest income on a tax-saving FD. Also, premature withdrawal is not permitted. If one chooses to withdraw the FD prematurely, they have to fore go the tax benefits.
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