Tax Saver Fixed Deposit

The provision of Section 80C of IT Act, 1961 whereby a deduction of up to Rs. 150,000 is allowed while computing total income of an individual or HUF in respect of the life insurance premium, contribution to Provident Fund etc. has been amended to include Fixed Deposits with a scheduled bank, for a period of not less than five years. Accordingly, an individual or HUF shall now be entitled to deduction of up to Rs. 1,50,000 on fixed deposits for the period of five years or more. This exemption shall be part of the Rs. 1,50,000 exemption presently available in respect to life insurance premium, contribution to PF etc.

Choose between a quarterly compounding / reinvestment of interest scheme, quarterly payout of interest scheme and monthly payout interest scheme to the designated account of the depositor.

Minimum investment is Rs. 100 or multiples thereof Maximum deposit amount is Rs. 1,50,000

• Single holder type deposit receipt can be issued to an individual for himself, or in the capacity of the Karta of the Hindu undivided family.
• Joint holder type deposit receipt can be issued jointly to two adults or jointly to an adult and a minor, and payable to either of the holders or to the survivor: provided that in the case of joint holder type deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit who should be a PAN holder.

Tax benefits under this scheme are to be claimed through the Fixed Deposit receipt issued by the Bank.

Minimum lock-in period of 5 years is stipulated to enable the deposit to be assessed as exempt from taxable income u/s 80C of the Income Tax Act. No term deposit will be encashed before the expiry of 5 years from the date of receipt.

Fixed Deposits with the bank shall be subject to Tax Deduction at source as per Income Tax Act 1961:

• Interest on these term deposits shall be liable to tax under the Act, on the basis of annual accrual or receipt, depending upon the method of accounting followed by the assessee.
• The tax on such interest shall be deducted in accordance with the provisions of section 194A or section 195 of the Act.

*For all new Reinvestment Term Deposits to be opened on and after 1st August, 2013 and all existing Reinvestment Term Deposits that may be renewed on and after 1st August, 2013, interest reinvested would be net of TDS and hence the maturity value would vary to that extent.