Fixed deposit schemes are always a good investment option, preferred by the investors. In spite of a very good interest rate offered by the banks post, tax deducted at source (TDS) return on such investments is pretty low. Investing in bank fixed deposit schemes is extremely safe, and is also a way of gaining a fixed income on the investment made. The tenure of the fixed deposit schemes can range between 15 days to 10 years, and depending on this duration the interest also varies from 7.5% to 10% per annum.
Presently a few different types of fixed deposit schemes are available, like term or recurring fixed deposit, and tax saving fixed deposit schemes. Fixed Deposits attract TDS, if the principal amount exceeds INR 10,000 in a financial year. However, for any income less than INR 10,000 yearly no TDS is deducted. TDS at a rate of 10% annually will be deducted on your deposit, provided that your PAN card details are submitted. Otherwise, the rate of annual TDS deduction will be 20%.
Fixed term deposits are often considered as the safest and most favorable savings option by the tax experts for the number of benefits it imparts, and some of them are as follows.
- Simple and easy application process offered by both public and private sector banks. Online banking has mode things more convenient and from form fill up to money transfer, everything can be done in a jiffy.
- Assurance of receiving a promised amount on any fixed deposit scheme. Compared to the other high return investment options like shares, fixed deposits are always safer and ensures guaranteed returns.
- Tax saving benefits are the most important advantage of fixed deposits. Though there is a limit over the total investment amount, but still FDs can waive taxes and help you save on your investment.
- If you are looking for an investment option with minimum risks, then fixed deposit schemes are always the best options. Moreover, a cumulative fixed deposit plan also grows with time and the promised amount is always paid to the depositor post maturity.
- Apart from safety and tax savings, there is another important advantage of a high return fixed deposit scheme, and that is an easy approval of loans. Depositors always stand a better chance of availing a loan from the bank with which they already have a fixed deposit account. The FD amount works as the security in these cases and also considerably speed up the loan approval process.
At the end it can be definitely concluded that carrying benefits like assured return, tax benefits and other advantages, FD is the best risk free investment options. They are also not highly complex to understand, and it is little surprising that more often than not they are the first preference for investment for both large and small scale investors. Different banks are found to offer different rates of interest on fixed term deposits. Before you invest in one, it is good to check out the annual interest rate offered by different banks. Interest rate also keeps changing depending on the government policies and depositing with a public sector bank is always a wise choice. So, what are you waiting for? If you have surplus cash at disposal, invest it in a profitable fixed deposit scheme, today!
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