Fixed Deposits (FD)

When selecting which FD to invest in, keep the following factors in mind:

• Check the interest rates offered by the bank and if possible lock into the highest FD interest rate
• Try to match the tenure of the FD with your financial goal to ensure availability of funds as and when you need it
• Check the conditions for premature withdrawal i.e., penalty if any or time period before withdrawal is permitted
• Check if it is possible to open the FD online as it will save you time

• Offers a safe and secure investment option for risk averse investors
• Fixed interest rates that remain unchanged during the tenure of the FD, thereby offering a security net against market volatility
• Flexible tenures- Select the FD tenure so that it matches the time frame required for your various needs
• Knowing the exact maturity amount of your FD can help plan for your future requirements
• Easy to redeem or withdraw in case of any emergency
• Invest in lump sum amount or monthly installments, depending on your cash flow
• Senior citizens looking for regular income can select option of monthly interest payment
• Avail a loan against your FD without withdrawing it, at a lower interest rate than an unsecured loan
• Take overdraft against your FD and pay interest only the amount you utilize, while rest of the FD amount continues to earn interest
• Get tax exemption up to Rs 1.5 lakh by investing in a tax-saver FD

• Tenure: FDs of lower tenure offer lower rates while FDs of higher tenure offer higher rates. If you are looking to earn higher returns and do not foresee any immediate need for funds, lock into the highest possible tenure
• Depositor’s age: Senior citizens i.e. those above 60 years of age usually get a higher interest rate than regular depositors
• Deposit Amount: Some FDs offer higher interest for higher amounts, such as Fixed Deposit Plus, thereby ensuring secured and higher returns

• Investment up to Rs 1.5 lakh in a Tax Saver FD is exempt from income tax under Section 80C
• Interest earned on FDs of all kinds is added to your income tax and taxed as per your income tax slab
• TDS of 10% is applicable if PAN is provided to the bank. If PAN is not provided, TDS is at 20%
• If the interest income from all your FDs is less than Rs 40,000 there is no TDS. For senior citizens the amount is Rs 50,000
• If your total annual income is less than Rs 2.5 lakh, i.e. if you are below the taxable limit, you can avoid TDS by submitting Form 15G to the bank
• Similarly, senior citizens who are below the taxable limit can avoid TDS by submitting Form 15H to the bank