What Is Tax-Saving FD (Fixed Deposit) Under 80C

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Table of Content

Overview

Features

Who should consider investing in a Tax Saving Fixed Deposit?

To open a Tax Saving Fixed Deposit, you will need:

Remember

Frequently Asked Questions

Conclusion

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Overview

Save tax while earning interest on your FD? Yes, it’s absolutely possible. A Tax Saving FD works just like a regular Fixed Deposit, but it comes with a fixed lock in period of 5 years. Once you invest the amount, you cannot take it out before it matures. This helps you save in a disciplined way and enjoy stable returns. You can pick between cumulative and non-cumulative interest payout options based on what suits your financial needs.

Let us look at some features of Tax Saving Fixed Deposits:

Tax deductions
Lock-in period of 5 years
Claim up to ₹1.5 lakh under Section 80C
Pick quarterly, monthly, or cumulative payouts: start with as little as ₹100

Who should consider investing in a Tax Saving Fixed Deposit?

Great for salaried and self-employed individuals who want to lower their taxable income under Section 80C
Good choice for anyone looking for a safe and low risk investment that protects capital and gives steady returns
Senior citizens and conservative investors can also benefit from the fixed returns and safety these deposits offer.

To open a Tax Saving Fixed Deposit, you will need:

Identity proof like PAN or Aadhaar card
Address proof such as utility bills or a bank statement

Recent passport sized photographs
Bank account details to link and manage your deposit

Remember

Tax Saving FDs have a fixed 5-year lock in period, and you cannot withdraw the money early.
The interest you earn is taxable, and TDS is deducted, which may affect your total returns.

Also Read: Is using an FD as collateral a smart move?

Invest in a Tax Saver FD

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Frequently Asked Questions

Who can invest in a Tax Saver FD?
Any individual taxpayer or Hindu Undivided Family can invest in a Tax Saving Fixed Deposit.
What is the difference between a regular FD and a Tax Saver FD?
A Tax Saving FD gives you tax deductions under Section 80C, while a regular FD does not.
How much FD interest is free from TDS?
Interests up to ₹40,000 are free from TDS for individuals. For senior citizens, the limit is ₹50,000.
Can I take out money from a Tax Saving FD before it matures?
No, you cannot withdraw the money before the 5-year lock-in period is over.

Conclusion

Tax Saving FDs are a safe and smart way to grow your savings while enjoying tax deductions under Section 80C. With guaranteed returns and protection of your capital, they are a great option for investors who prefer less risk.

If you are looking for a dependable and tax-friendly investment, you might want to check out Axis Bank's Tax Saver FD. It offers good interest rates and easy options to open and manage your deposit, making the whole process smooth and simple.

Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.