You may have done a lot of research to get the best fixed deposit interest rates. It will be all for nought if you pay a lump sum as taxes. Hence, to get the best returns, you may choose to invest in a tax saver FD.
What is a Tax Saver FD?
Tax Saver Fixed Deposit (FD) provides tax deduction benefits under section 80C of the Income Tax Act, 1961. The best benefit of Tax Saver FD is that it offers taxation benefits. You can claim up to INR 1.5 lakh of tax deduction through tax saver FD.
However, the income from tax saver fixed deposit is taxable. You can submit a 15G or 15H form to get rid of the taxation on interest and get the maximum from fixed deposit rates.
Lock-in Period and Fixed Deposit Rates
Tax saver FD has a compulsory lock-in period of a minimum of 5 years and a maximum of 10 years, is one of the best FDs available at your disposal. Upon maturity, you can reinvest it for another five years.
Tax saver fixed deposit rates vary from one financial institution to the other.
Some of the best financial institutions like PNB Housing provide fixed deposit rates of 5.70%. Senior citizens may avail comparatively better interest rates at 5.95% on tax saver FD.
Features of Tax Saver FD
- It is the best FD option to save tax under section 80C of the Income Tax Act, 1961
- Along with tax saving, it also offers high fixed deposit rates.
- You can invest as low as Rs. 10,000. Hence, it is the best FD with low investment.
- You can invest and save taxation on up to Rs. 1.5 lakhs, making it one of the best FD schemes.
- Even if you are a minor, you can open a joint account with an adult.
- You can not use tax saver FD for availing loans.
- It is the best FD that provides the lowest tenure for tax saving schemes with a guaranteed return.
- You can use a 15G or a 15H form to get tax benefits up to Rs. 40,000, making it the best FD for saving taxes.
- You can invest in a cumulative or non-cumulative scheme. Choose the cumulative scheme if you want to get regular interest payout.
- An investor can keep any relative as the nominee who will get the funds in case of an unfortunate demise of the investor.
- Senior citizens can get up to 0.25% higher fixed deposit rates.
Documents Required to Open a Tax Saver FD
Tax Saver fixed deposit may be the best FD at your disposal. However, you need to know how to apply for the same and the documents you will require for the approval of the best FD with taxation benefits. These include the following:
- PAN Card
- Voter ID card
- Driving License
- Aadhar Card
- Senior Citizen ID Card
The Address Proof can be:
- Electric Bill
- Bank statement
If you have a lot of taxable income, tax saver FD may be the best FD at your disposal. In addition to getting the best fixed deposit rates, you can also save a lot of money.