Opting for a Fixed Deposit can be an excellent way to earn interest instead of letting the funds lie idle in your Savings Account. FDs are typically a widely preferred investment option. Theyalso offer the possibility of assured returns and are often considered a safe avenue to invest your funds.

Apart from this, when you opt for a Tax-Saving FD, you not only enjoy the benefit of interest income but also enjoy tax benefits. In this guide, we discuss more about a Tax-Saving FD and highlight its various features.

About Tax-Saving FDs

A Tax-Saving FD lets you enjoy tax deductions under section 80C of the Income Tax Act of 1961. Hence, when you opt for this deposit scheme, you can earn income at FD interest rates offered by your bank. In addition, you can alsoclaim a tax exemption of a maximum of Rs. 1.5 lakh on investing the amount in this scheme. Hence, unlike other FDs, this FD offers a tax-saving facility.

How to open?

Today, you can instantly open an FD Account from anywhere and at any time using Online Banking facilities offered by your chosen bank. The process also does not require any physical documents. Instead, you only need a Savings Account with your preferred bank and sufficient balance in it to fund the FD.

Besides this, you can also conveniently manage your FD from anywhere using theOnline Banking facilities.

Features

The various essential characteristics of a Tax-Saving FD include the following:

Eligibility

Hindu undivided familiesand resident individuals 18 years or above are eligible to open a Tax-Saving FD. You canopen a Fixed Deposit Accountindividually or jointly. Usually, minors can also opt for this FD jointly with an adult. According to the guidelines of the Indian Government, the income tax benefit can be availed of by the first FD holder.

Lock-in Period

Tax-Savings FDs have a lock-in period of a minimum of five years. However, you can stay invested for longer.

Higher Interest Rates for Senior Citizens

When you opt for an FD, banks typicallyprovide senior citizenswith a higher interestrate on such aTerm Deposit. This benefit is also generally available in the case of Tax-Saving FDs.

Nomination Facility

You can enjoy the benefit of a nomination facility when opening a Tax-Saving FD.

Deposit Amount

When opening an FD using the Banking app, you need to check the minimum deposit amount. This sum usually varies across banks. Similarly, when opening a Tax-Saving FD, the minimum deposit amount might vary depending on your chosen bank. However, the maximum amount is fixed at Rs.1.5 lakh.

Conclusion

Now that you know what a Tax-Saving FD is, you can determine your investment goals and conveniently open them online.