FIXED DEPOSITS (FD's) IS VERY FAMOUS TAX SAVING INSTRUMENTS

FIXED DEPOSITS (FD’s) OR TIME DEPOSIT ARE ALSO YOUR TAX SAVING INSTRUMENTS.

FIXED DEPOSITS CAN BE MADE WITH ANY NATIONALIZED BANKS WHICH ARE KNOWN AS ONE OF THE SAVE INVESTMENTS.
FIXED DEPOSIT CARRY CERTAIN ADVANTAGES WHICH MAKES IT VERY POPULAR. FD's CAN BE MADE FOR BOTH SHORT TERM AS WELL AS LONG TERM WHICH MEET THE REQUIREMENT OF ALL THE TYPE OF INVESTORS, BUT FD's ARE VERY FAMOUS AMONG THE SMALL INVESTORS AND WHO WANT TO TAKE LESS RISK WITH THEIR INVESTMENTS.ONE CAN TAKE LOAN FROM ANY FINANCIAL INSTITUTION AGAINST HIS FIXED DEPOSIT, BY THIS HE CAN MEET HIS SHORT TERM OBLIGATIONS.

KEY HIGHLIGHTS

• ONE OF THE HIGHLY USED INSTRUMENT BOTH FROM INVESTMENT AS WELL AS TAXATION POINT OF VIEW
• CARRY FIXED RATE OF INTEREST WHICH MAY VARY FROM 8% TO 12% DEPENDING UPON THE TENURE OF INVESTMENT
• IT CAN SAVE YOUR TAX UPTO Rs 36000 (assuming no tax saving under section 80C and income is more than Rs 8,00,000 w.e.f 01.04.2011)
• SUITABLE FOR BOTH LONG TERM AS WELL AS SHORT TERM INVESTMENT
• IT IS LIQUID IN NATURE, ONE CAN PRE-MATURE HIS DEPOSIT VERY EASILY

TAX IMPLICATIONS

BOTH INDIVIDUALS AS WELL AS HUF, CAN CLAIM DEDUCTION UNDER SECTION 80C OF INCOME TAX ACT, 1961 FOR THE AMOUNT WHICH LEAST OF AMOUNT INVESTED OR Rs 1,20,000 IN FIXED DEPOSITS OR TIME DEPOSITS PROVIDED THAT THE TENURE OF FD,s IS NOT LESS THAN 5 YEARS

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