Bank Fixed Deposits (FDs) That Save Income Tax Under Section 80C

Time to revisit your yearly earnings and check on the investments you have done throughout the year to save income tax. It’s a common knowledge that there is a deduction of INR 1.5 lacs under section 80C of Income Tax Act. This can be easily done through tax saving fixed deposits with a minimum tenure of 5 years. However you need to lock in your amount for a minimum of 5 years. Many banks nowadays offer online provisions for such tax saving fixed deposits. The interest rates are similar to the non-tax savings fixed deposits with senior citizens given a premium on the regular rates. Other popular investment plans are insurance premium, EPF or PPF contribution.

10 Points you need to remember that will help you save income tax:

1) All income tax saving fixed deposits have a lock in period of minimum 5 years. The amount cannot be withdrawn pre maturely in such cases

2) Some banks such as SBI offer Fixed deposits with minimum tenure of 5 years and maximum ten years.

3) Below is a comparative interest rates of common banks in India

4) The maximum investment under 80 C through income tax saver fixed deposits is Rs. 1.5 lakh.

5) This fixed deposit can be started with a minimum amount of as low as INR 100. SBI for instance gives this investment opportunity with a minimum amount of INR 1000.

6) Interest earned on such tax saving fixed deposit is taxable according to the individual slabs.

7) Tax deducted at Source also known as TDS is applicable on the earned interest. TDS is applicable on payable interest or interest reinvested on fixed deposits across all branches exceeding INR 10,000 in a complete financial year.

8) Interest can be earned monthly, quarterly, semi-annually or annually and can be reinvested according to the investors’ discretion.

9) For joint holder fixed deposit the tax benefits can be paid only to the primary holder..

10) All Tax savings deposits have nomination facilities.