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A Fixed Deposit is an excellent investment option for risk-averse individuals. Not only is it safe and flexible, it also comes with guaranteed returns and a predefined rate of interest. Another benefit is that it can easily be availed online across all banks and NBFCs in India.
Recently, there is a new type of FD that has become popular in the market and is known as the tax-saving FD. A tax-saver fixed deposit is a type offixed deposit, under which you can avail a tax deduction as per Section 80C of the Income Tax Act, 1961. Section 80C of the Income Tax Act, 1961 allows taxpayers to avail certain deductions on their earned income, provided they have successfully made investment mentioned under Section 80C. A tax saver FD allows a tax deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act, 1961.
A tax-saver fixed deposit scheme comes with a mandatory lock-in period of 5 years. The interest earned is taxable and varies from 5.5% to 7.75%.
The important benefits of Tax Saving FDs are:
The important features of Tax Saving FDs are:
Can we show FD in 80C?
No, you can only show a Tax-Saving FD under Section 80C. Normal FDs are shown via TDS certificate or Form 15H/15G under Form 26AS.
Does fixed deposits come under Section 80C?
No, only a tax-saving fixed deposit scheme comes under the purview of Section 80C of the Income Tax Act, 1961.
Does fixed deposit come under tax exemption?
No, only a tax-saving fixed deposit scheme comes under tax exemption.
Is Fixed Deposit exempted from tax?
No, only a tax-saving fixed deposit scheme is exempted from tax.
What comes under Section 80C of Income Tax?
PPF, EPF, Insurance, NSC, SCSS, ELSS, etc. come under Section 80C of the Income Tax, 1961.
Where can I save tax other than Section 80C?
You can save tax under Section 80CG, 80CCD, 80D other than Section 80C.