If you want to get tax exemption by investing in FD, then know here about Tax Saving FD. You can get the option of tax saving FD in all banks and post offices.
Fixed deposit is a popular means of investment. This is because FD is a reliable means of investment because your money remains safe in it and you also get guaranteed returns on it. But people with high income do not get tax benefits on FD. The reason for this is that whatever interest you earn is added to your annual income. In such a situation, if your income comes under the ambit of tax, then you have to pay tax on it as per the slab rate. But if you want to avail tax benefits through FD, then you can also get this option in FD. Know about tax saving FD- Know how to get benefits
If you want to claim tax deduction on FD, then you will have to invest in FD for at least 5 years. 5 year FD is known as tax saving FD. You will get this option from banks to post offices also. Its interest rate may vary in different banks and post offices. In 5 year FD you get the benefit of Section 80C of the Income Tax Act. Under Section 80C, you can claim a deduction of Rs 1.5 lakh from your total income.
These are the disadvantages of breaking before 5 years
If you break your FD before 5 years, the bank not only charges you a penalty but you also do not get tax benefits. In this situation, the entire amount of the year in which you break the FD will be added to your income on which you have availed the benefit of income tax exemption. Apart from this, interest is also added to your income. After this, you have to pay tax according to the income tax slab you fall in.
How much interest is there on tax saving FD?
- Post Office- 7.5%
- State Bank of India- 6.5%
- Bank of Baroda- 6.5%
- Bank of India- 6.5%
- Punjab National Bank- 6.5%
