Fixed deposits are one of the most popular investments in India, as they give you the security of your money at a high rate of interest. But you also have to pay tax on the interest earned by them. The tax will be deducted at source (TDS) by the bank for all amounts up to Rs.50,000 and 20% tax for amounts above Rs.50,000.
A fixed deposit is a good way to start or grow your finances. You can save money by investing a lump sum in an FD, and it’s available at all bank branches as well as NBFCs. The return on these accounts is fixed, which means you know exactly what you will earn. Other than this, you can enjoy tax benefits when interest is paid on FDs. To help you understand the best ways to use these investments, we explain all the rules and regulations surrounding fixed deposits in India.
An RBL Bank Fixed Deposit allows you to invest in a safe and secure way. You can get higher and guaranteed returns, and a flexible tenure for your investment, and you will also have the option to close your FD in times of emergencies. You can also use the RBL Bank Fixed Deposit calculator to know the maturity amount for the tenure that you require. Here are some rules and regulations that you have to keep in mind while investing in this scheme:
1. Tax Deduction at Source on FDs:
Step by step process to find out TDS on FD Interest. Whether your bank or NBFC has paid a surplus or deficit TDS on deposit interest, what are the steps to know it? This is a step by step guide on how an individual can know about the taxes deducted by the bank for getting FD interests.
2. Tax on FD interest:
You will face additional taxes if you amount earned on your account is above the taxable limit. Interest earned from your account is also taxable. You will be taxed at the rate applicable to your total income as mentioned in the Income tax act.
There are just a few risks to consider with FDs: The bank may suffer a financial collapse, resulting in the loss of your deposit. To minimize this risk, you may choose to spread your deposit across different banks or vary the regularity of withdrawals. Also, there is also no guarantee that the interest earned on an FD will be higher than inflation.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) had been setup in the year of 1976. The sole purpose for the setup is to provide insurance cover for an investor insuring his deposit with a bank or NBFC. If due to any reason, the bank/NBFC fails to return your money as per your agreement, then this corporation will come to your rescue.
4. Loan facility on an FD:
Some banks and NBFCs offer loans against Fixed Deposits. This sort of loan is usually in the form of an overdraft facility, whereby the amount extended for a loan depends on deposit size and tenure. You can choose the term of your loan and they you can keep your savings intact until maturity, if it falls within the duration of your fixed deposit. Pre-mature withdrawal of your limited deposit amount will not be possible.
5. Penalty on early withdrawals
The flexibility offered by FDs is a major attraction for investors. However, since FD accounts have only one feature – fixed maturity period – this may sometimes be why a person avoids it. The only time you can withdraw the principal amount of your fixed deposit is at the end of the tenure. Early withdrawal will attract a penalty from the bank, which is usually much higher than what you would earn on the interest rate.
With the current happenings in the economy, it becomes essential to maintain a proper financial balance. In this situation, FDs have been instrumental in helping citizens and NRIs in India to keep their savings intact. Opening an FD is one of the best ways to have a secure access to funds when it comes time for making payments or meeting expenses.