These days, if you want to save tax and invest somewhere where your money will be safe, then Tax Savings FD (5 year FD) and Post Office National Savings Certificate (NSC) scheme can be right for you.
In NSC scheme, interest of 7.70% is available annually along with tax exemption. Investment in NSC scheme also has to be made for 5 years. Here, apart from the National Savings Certificate Scheme of the Post Office, we are also telling you how much interest the major banks of the country are offering on 5 year tax saving FD.
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 on an annual basis, but the interest amount is given 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 period is 5 years. You cannot exit the scheme before this.
- The amount deposited in National Savings Certificate gets tax exemption under Section 80C of Income Tax.
- You can invest any amount in NSC. There is no maximum limit on investment in this. Click here for more information related to this schemes
Benefit of tax exemption available on 5 year FD Tax saving FD matures in 5 years. By investing in this, you can claim a deduction of Rs 1.5 lakh from your total income under Section 80C of the Income Tax Act. Understand it in simple language, you can reduce up to Rs 1.5 lakh from your total taxable income through Section 80C.
It is important to keep these 4 things in mind before investing money in FD…
Do not invest all your money in one FD If you are planning to invest Rs 10 lakh in an FD in one bank, instead invest in 9 FDs of Rs 1 lakh each and 2 FDs of Rs 50,000 each in more than one bank. With this, if you need money in between, you can arrange for the money by breaking the FD midway as per your need. The rest of your FD will remain safe. Withdrawal of interest Earlier there was an option to withdraw interest on quarterly and yearly basis in banks, now in some banks monthly withdrawal can also be done. You can choose it as per your need.
Also see the interest rate of loan available on FD You can also take a loan against your FD. Under this, you can take loan up to 90% of the value of FD. Suppose the value of your FD is 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, then you can get a loan at 7 to 8% interest rate.
Senior citizens get more interest Most banks offer up to 0.50% higher interest on FD to senior citizens. In such a situation, if there is a senior citizen in your house, then you can earn more profit by getting an FD made in his name.
Graphics Source: VaskarAssets
