While investing your money in any of the saving plan or insurance policy one concern is saving tax as well gaining good returns on your investment.
You are always in search of those plans and saving schemes, which will give you higher returns along with tax benefits. It is a kind of double benefit combo. When you invest in any policy or mutual fund, you can claim the tax benefits, but there is no surety of assured returns on your investments.
With bank fixed deposits also you can save tax by investing in certain types of fixed deposit.
You can claim the tax benefits under Section 80C of the Income Tax Act to a maximum of upto Rs 1.50 lakhs per annum.
The catch is that you need to invest for a min of 5 year term in such deposits under any bank and can avail the tax benefits.
You cannot withdraw from such fixed deposits before maturity or 5 years.
The current rate on these fixed deposits is 7.25-7.5 per cent and is available from all major banks.
For senior citizens there is additional 0.25 per cent extra.
So by investing you save Tax plus you have a assured income too so the actual returns come out much higher as tax saving is added in it.
So if you look at the tax rates that exist currently in 2016
|How Tax can be Saved via Bank Fixed Deposit-Positives and Negatives|
You can see how much tax that you have to pay.
But if you can invest Rs 1.5 lakhs from your income of that year in the tax-saving fixed deposit it will lower your taxable income by that Rs 1.5 lakhs.
So if you earn Rs 12 lakhs and you invest Rs 1.5 lakhs, your income for taxation will be considered as Rs 10.5 lakhs.
The other features or benefits are
Easy to invest.
Available across all banks
Redemption comes to your account directly.
Assured returns and bank trust.
Lock in period of 5 years
No loan available
Interest on this is taxable.
This product is good for customers who do not need money for next 5 years and do not want to invest in risky products like shares and mutual funds. It’s also good for elderly people who have want to reduce their tax incidence. So for all non-risk takers it’s a good product to save tax and get assured returns.