Investing in a Fixed Deposit? Know these 5 Rules and Regulations!

A lot of people invest in FDs as the fixed deposit interest rates are promising and guaranteed. Though the interest has now lowered, people who do not want to risk it park their funds in FDs. But before you decide to open a fixed deposit account there are certain rules and regulations that you should be aware of:

Read more
Best Investment Plans
  • Save upto ₹46,800 in tax under Sec 80C

  • Inbuilt Life Cover

  • Tax Free Returns Unlike FD+

Get Guaranteed returns upto 7.5%*
Invest in 100% Guaranteed Return Plans with Tax benefits under sec 80C & No Tax on returns*
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp
We are rated~
rating
6.7 Crore
Registered Consumers
51
Insurance Partners
3.4 Crore
Policies Sold

There is a Penalty on Early Withdrawals

The amount that you invest in your fixed deposits is locked in for the complete duration. So, before you park your funds in a fixed deposit check your financial requirements and liquid funds that you will need for that horizon.

Let’s say you start a 5-year FD then your bank will only permit you to withdraw it after the completion of the tenure. And if you need the money before your FD matures, your bank will levy a penalty. And if the penalty is close to 1%, then you might end up losing the interest earned for that tenure. Therefore, the first rule to invest in FD is to avoid breaking your Fixed Deposits before the maturity date.

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
VIEW PLANS
*For annual premium upto ₹5 Lacs

Tax Treatment of FD Interest

Interest earned on fixed deposits is fully taxable. It is taxed as per the slab rate that applies to your total taxable income along with applicable surcharge/cess. For instance, if your taxable income for the fiscal year 2019-2020 is Rs. 10 lakh, then the amount earned by you as interest on your fixed deposit will be taxed at 20% (income tax slab rate for taxable income Rs. 10 lakh).

TDS on Fixed Deposits

The tax levied on FD interest is the Tax Deducted at Source (TDS). The bank pays it on your behalf while it credits the interest earned to your account. If the amount of FD interest exceeds Rs 40,000, which was earlier Rs 10,000, the bank deducts TDS at the rate of 20% and at the rate of 10% if you provide your Permanent Account Number or PAN number.

And in case the bank pays a surplus or deficit TDS on your FD interest, then the difference is either received or paid by you. TDS is not applicable on Post Office Term Deposits, therefore individuals don’t need to declare interest earned on POTDs at the time of filing their ITR.

The interest earned on FD is taxable as per your tax slab rates along with Cess or surcharge that is applicable. For instance, if your annual income is above Rs 10 lakh per annum, your tax slab would be 30%. Suppose you earn an interest of Rs 1 lakh then it will be taxed at 30% and 4% additional cess. The TDS rate on FDs is 10% if the interest earned is more than Rs 40,000 during a financial year.  

The TDS rate on Non-Resident Ordinary FDs is 30%. However, there is no TDS on Non Resident External (NRE) and Foreign Currency Non Resident (FCNR) Deposits; as these are tax-free FDs. The bank deducts the TDS and the details are uploaded in Form 26AS.

Nevertheless, TDS is not deducted on Post office fixed deposits or recurring deposits. Talking about Senior Citizens i.e. people above the age of 60 years can get up to Rs 50,000 per year in FD interest tax-free. TDS is not deductible for up to Rs 50,000 of the interest received per year for them.

fd return beater

Interest Earned is added to your Income

Like equities and mutual funds, fixed deposits are not as tax-efficient. The interest that you earn on fixed deposits is clubbed with your total income. This income is taxable as per your tax slabs.  Let’s say you open a fixed deposit in your spouse’s name, then the money used in FD won’t attract tax but the interest earned will be taxable because it is a part of your income.

For this reason, a lot of people invest in Equity-Linked Saving Scheme (ELSS) as they are tax efficient and also help to grow your wealth, as they earn better returns and have a shorter lock-in period.

Tax-saving Benefits

Tax saver FDs that are opened for 5-years are eligible for tax benefits under section 80 C. The exemption limit is up to Rs. 1.5 lakh. And if you withdraw the amount from your FD account, it will attract penalty charges.  

Tax- saving for Senior Citizens

TDS does not apply to investors above the age of 60 years if the interest earned on their FD is not more than Rs 50,000.

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

Additional Tax-benefits

Higher FD interest rates and tax-saving makes FDs a perfect choice for elderly people. They are suitable for people who want to open FD for their parents to ensure a fixed source of income when they retire and grow older. For example, if you open an FD in SBI Bank then SBI FD interest rates range from 3.40% to 6.20% for senior citizens, as of September 2020.

Under the purview of Section 80TTB of the IT Act, senior citizens can claim tax deduction up to Rs 50,000 on the interest earned on their FD.

Loan Facility

All banks in India that have a provision of fixed deposit permit an individual to take a loan of up to 90% against their bank FD. In this case, a one percent higher interest rate is charged by the bank.

Bottom-Line

So, this was all about bank fixed deposits scheme. Before investing you should have some clarity regarding the functioning of a fixed deposit account. It comes with a pre-fixed interest rate, which is 0.5% higher for senior citizens. It helps in saving surplus money and builds a corpus for future financial needs.

Allahabad Bank FD Interest Rates

Allahabad Bank FD Interest Rates

Andhra Bank FD Interest Rates

Andhra Bank FD Interest Rates

Assam Gramin Vikash Bank FD Interest Rates

Assam Gramin Vikash Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

AU Small Finance Bank FD Interest Rates

Axis Bank FD Rates

Axis Bank FD Rates

Bajaj Finance FD Interest Rates

Bajaj Finance FD Interest Rates

Bandhan Bank FD Interest Rates

Bandhan Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

Bangiya Gramin Vikash Bank FD Interest Rates

Bank of Baroda FD Interest Rates

Bank of Baroda FD Interest Rates

Bank of Ceylon FD Interest Rates

Bank of Ceylon FD Interest Rates

Bank of India FD Interest Rates

Bank of India FD Interest Rates

Bank of Maharashtra FD Interest Rates

Bank of Maharashtra FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates

Baroda Gujarat Gramin Bank FD Interest Rates

Canara Bank FD Interest Rates

Canara Bank FD Interest Rates

Capital Small Finance Bank FD Interest Rates

Capital Small Finance Bank FD Interest Rates

Central Bank of India FD Interest Rates

Central Bank of India FD Interest Rates

Citibank FD Interest Rates

Citibank FD Interest Rates

City Union Bank FD Interest Rates

City Union Bank FD Interest Rates

Corporation Bank FD Interest Rates

Corporation Bank FD Interest Rates

Dakshin Bihar Gramin Bank FD Interest Rates

Dakshin Bihar Gramin Bank FD Interest Rates

DBS Bank FD Interest Rates

DBS Bank FD Interest Rates

Dena Bank FD Interest Rates

Dena Bank FD Interest Rates

Dhanlaxmi Bank FD Interest Rates

Dhanlaxmi Bank FD Interest Rates

Equitas Small Finance Bank FD Interest Rates

Equitas Small Finance Bank FD Interest Rates

ESAF Small Finance Bank FD Interest Rates

ESAF Small Finance Bank FD Interest Rates

HDFC Bank FD Interest Rates

HDFC Bank FD Interest Rates

HSBC FD Interest Rates

HSBC FD Interest Rates

ICICI Bank FD Interest Rates

ICICI Bank FD Interest Rates

IDBI Bank FD Interest Rates

IDBI Bank FD Interest Rates

IDFC First Bank FD Interest Rates

IDFC First Bank FD Interest Rates

Indian Bank FD Interest Rates

Indian Bank FD Interest Rates

Indian Overseas Bank FD Interest Rates

Indian Overseas Bank FD Interest Rates

IndusInd Bank FD Interest Rates

IndusInd Bank FD Interest Rates

Jana Small Finance Bank FD Interest Rates

Jana Small Finance Bank FD Interest Rates

Karnataka Bank FD Interest Rates

Karnataka Bank FD Interest Rates

Kerala Gramin Bank FD Interest Rates

Kerala Gramin Bank FD Interest Rates

Kotak Mahindra Bank FD Interest Rates

Kotak Mahindra Bank FD Interest Rates

Lakshmi Vilas Bank FD Interest Rates

Lakshmi Vilas Bank FD Interest Rates

Muthoot Capital

Muthoot Capital

Nainital Bank FD Interest Rates

Nainital Bank FD Interest Rates

Odisha Gramya Bank FD Interest Rates

Odisha Gramya Bank FD Interest Rates

Paschim Banga Gramin Bank FD Interest Rates

Paschim Banga Gramin Bank FD Interest Rates

Paytm Payments Bank FD Interest Rates

Paytm Payments Bank FD Interest Rates

PNB FD Interest Rates

PNB FD Interest Rates

Prathama UP Gramin Bank FD Interest Rates

Prathama UP Gramin Bank FD Interest Rates

RBL Bank FD Rates

RBL Bank FD Rates

Saurashtra Gramin Bank FD Interest Rates

Saurashtra Gramin Bank FD Interest Rates

SBI FD Interest Rates

SBI FD Interest Rates

Shriram Finance FD Interest Rates

Shriram Finance FD Interest Rates

State Bank of Hyderabad FD Interest Rates

State Bank of Hyderabad FD Interest Rates

State Bank of Mysore FD Interest Rates

State Bank of Mysore FD Interest Rates

State Bank of Travancore FD Interest Rates

State Bank of Travancore FD Interest Rates

Syndicate Bank FD Interest Rates

Syndicate Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates

Tamil Nadu Grama Bank FD Interest Rates

Telangana Grameena Bank FD Interest Rates

Telangana Grameena Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates

Tripura Gramin Bank FD Interest Rates

UCO Bank FD Interest Rates

UCO Bank FD Interest Rates

Ujjivan Small Finance Bank FD Interest Rates

Ujjivan Small Finance Bank FD Interest Rates

Union Bank of India FD Interest Rates

Union Bank of India FD Interest Rates

Uttar Bihar Gramin Bank FD Interest Rates

Uttar Bihar Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates

Uttarakhand Gramin Bank FD Interest Rates

Vijaya Bank FD Interest Rates

Vijaya Bank FD Interest Rates

Yes Bank FD Interest Rates

Yes Bank FD Interest Rates

Expand

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
+ Trad plans with a premium above 5 lakhs would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

FD Calculator

Total Investment

₹500 ₹30L
Enter Total Investment

Rate of Interest (Yearly)

1% 15%
Rate of Interest (Yearly)

Time Period

1 Year 15 Years
Enter Time Period
Interest Earned
Maturity Amount

FD Rates articles

Recent Articles
Popular Articles
BOI Current Deposits Plus Scheme

10 Jun 2024

The BOI Current Deposits Plus Scheme is a unique option for
Read more
BOI Capital Gains Account Scheme

10 Jun 2024

The Capital Gains Account Scheme, 1988, offered by the Bank of
Read more
BOI Star Flexi Recurring Deposit

10 Jun 2024

The BOI Star Flexi Recurring Deposit, offered by the Bank of
Read more
BOI MACAD - Star Motor Accidental Claimant Annuity Deposit

10 Jun 2024

BOI MACAD is a scheme by the Bank of India to handle
Read more
Bank Of India Super Special Deposit Account - Star Super Special Deposit Account

10 Jun 2024

The BOI Super Special Deposit Account, also known as the Star
Read more
Application for Withdrawal of Fixed Deposit
Fixed Deposits are the safest investment instruments. You invest the amount of your choice as the fixed deposit
Read more
Which Bank has the Highest Interest Rate for Fixed Deposit?
The Small Finance Banks offer the highest FD interest rates for a tenure between 7 days to 10 years. Unity Small
Read more
SBI Fixed Deposit Monthly Income Scheme
Fixed deposits are the safest investment vehicles for Indian financial planners. You can open a fixed deposit
Read more
SBI Fixed Deposit Double Scheme
The SBI Fixed Deposit Double Scheme is named Special Term Deposit to cater to investors looking to double their
Read more
Nominee Vs Legal Heirs for Fixed Deposits
Fixed deposits are a popular investment option for individuals who wish to earn a stable rate of interest on
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL