Tax Saving Fixed Deposit Is the Simplest and Easiest Way to Save Tax

Tax Saving Fixed Deposits is one of the currently approved avenues for investment. This deduction is allowed under Section 80C of Income Tax Act. Section 80C also defines the limit of investment for which deduction can be claimed under it. Presently, one can avail deduction under Section 80C up to 1.50Lacs.

The amount so invested is to be deducted from Gross Total Income to arrive at taxable income. Thus, if you invest in tax saving fixed deposits, you can avail the tax benefit of amount invested up to 1.50Lacs.

Know more about Tax Saving Fixed Deposits

Following are the key points which one should consider while investing in Tax Saving Fixed Deposits

  • Only Individuals and HUFs can invest in Tax Saving Fixed Deposits.
  • These deposits have a lock in period of Five Years

(Point to be noted: Premature withdrawals and loan against FDs are not allowed)

  • One can invest in these FDs through any public or private sector bank except for co-operative and rural banks.
  • One can hold these Tax Saving fixed deposits either in ‘Single’ or ‘Joint’ mode. In the case mode of holding is joint, the tax benefit is available to first person.
  • Section doesn’t specify any minimum amount to be invested to avail the benefit. Thus, the FD can be placed with a minimum amount which varies from bank to bank.
  • Investment in Post Office Time Deposit of 5 Years also qualifies for deduction under Section 80C of the Income Tax act.
  • Post Office fixed Deposit can be transferred from one Post Office to another.
  • The interest earned is taxable as per the investor’s tax bracket and therefore, TDS is applicable.
  • Nomination facility is also available for these FDs.