These days if you want to save tax and invest your money in a safe place then Tax Savings FD (5 Year FD) and Post Office National Savings Certificate (NSC) Scheme may be right for you.
NSC scheme earns 7.70% interest per annum with tax exemption. In NSC scheme also one has to invest for 5 years. Here, apart from Post Office's National Savings Certificate Scheme, we are also telling you how much interest the major banks of the country are offering on 5-year tax saving FDs.
Post Office National Savings Certificate
- Investment in Post Office National Savings Certificate (NSC) is earning 7.7% annual interest.
- In this, the interest is calculated annually, but the interest amount is paid only after the investment period.
- To open an NSC account you have to invest a minimum of Rs 1000.
- This account can be opened in the name of a minor and a joint account can also be opened in the name of 3 adults.
- Its maturity is 5 years. You cannot opt out of the scheme before this.
- Amount deposited in National Savings Certificate is tax exempt under Section 80C of Income Tax.
- You can invest any amount in NSC. There is no maximum investment limit in this. Click here for more information regarding these schemes
Tax exemption benefit available on 5 year FD A tax saving FD matures in 5 years. By investing in this you can deduct from your total income under Section 80C of the Income Tax Act Rs. 1.5 lakh can be claimed as a deduction. Understand it in simple language, you can through section 80C out of your total taxable income of Rs. Can reduce up to 1.5 lakhs.
These 4 things must be kept in mind before investing in FD…
Do not invest all your money in one FD If you are thinking of investing Rs 10 lakh FD in one bank, instead invest 9 FDs of Rs 1 lakh and 2 FDs of Rs 50,000 in more than one bank. Also, if you need money in between, you can manage the money by splitting the FD as per your requirement. Your remaining FD will be safe.
Withdrawal of interest Earlier banks had the option to withdraw interest on quarterly and annual basis, now some banks can also withdraw monthly. You can choose it according to your requirement.
Also check interest rate of loan available on FD You can also take a loan against your FD. Under this, you can borrow up to 90% of the FD value. Suppose your FD is worth Rs 1.5 lakh, then you can get a loan of Rs 1 lakh 35 thousand. If you take a loan against FD, you will have to pay 1-2% more interest than the interest you get on fixed deposits. For example, suppose you are getting 6% interest on your FD, you can get a loan at 7 to 8% interest rate.
Senior citizens get higher interest Most banks offer higher interest up to 0.50% on FDs to senior citizens. In such a situation, if you have a senior citizen in your household, you can earn more profit by having an FD in his name.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
