Let Tax2Win experts file your belated return & claim your TDS
Fixed Deposit is a popular investment option provided by banks, in which you can deposit fixed amount of money for a specific period of time and gain from high interest rates. It is one of the safe and secure investments which offers safety and stability to your invested amount. It pays a fixed rate of interest till the maturity period which is higher than regular savings account.
In other words, we can say that a Fixed Deposit is a bank deposit or deposit of the money in the bank for a specific period time chosen by the investor or depositor at a fixed rate of interest. In FD you can deposit money for as short as a week to 20 years of time. The opening of a fixed deposit with the bank is that you are lending money to the bank and it pays you interest that you agreed during the investment. As the time period and interest rates are fixed so it is called as Fixed Deposit (FD).
The list of different banks and their interest rates offerings in 2019 are mentioned below. This rates are from lowest 7 days to maximum range of 10 years.
|Bank||FD Rate of interest||Senior Citizen FD rates|
|SBI Fixed deposit||5.75% – 6.85%||6.25% – 7.35%|
|HDFC Bank fixed deposit||3.50% – 7.40%||4.00% – 7.90%|
|ICICI Bank||4.00% – 7.50%||4.50% – 8.00%|
|Axis Bank||3.50% – 7.55%||3.50% – 8.50%|
|Kotak Bank||3.50% – 7.40%||4.00% – 7.90%|
|IDFC Bank||4.00% – 8.25%||4.50% – 8.75%|
|Bank Of Baroda||4.50% – 6.85%||5.00% – 7.35%|
|Citibank||3.00% – 7.25%||3.50% – 7.75%|
|IDBI Bank||5.75% – 7.25%||5.75% – 7.55%|
|Indian Bank||4.50% – 6.75%||5.00% – 7.25%|
|Indian Overseas Bank||4.50% – 6.80%||5.00% – 7.30%|
|OBC||5.75% – 6.75%||–|
|PNB||8.30% – 8.75%||6.25% – 7.25%|
|HDFC||3.50% – 7.90%||4.25% – 8.00%|
|PNB HOUSING FINANCE||8.30% – 8.45%||8.50% – 8.70%|
|Allahabad Bank||5.00% – 6.75%||–|
To suit the different needs of different customers banks offers various types of Fixed deposits. They are:-Regular FD
Depositing the money for a fixed tenor , ranging from 1 week to 10 years. The rate of interest is fixed during the time of deposit but it is more than the savings account.Tax-savings FD
The principal amount of the FD is tax exempt upto Rs.1.5 Lakh in a year. The investment made is locked for 5 years and can’t be withdrawn before the maturity date.Senior Citizen FD
This FD scheme is for the people aged above 60 years, the rate of interest in a little more than regular FD .It is 0.5% to 1% more than the regular FDs.
To understand the more easily a comparison of two different investments are shown. The growth rate and returns are determined.
This is the stock prices and the loss of billions for the facebook , just in hours on the day which no one expected and many investors lost millions of dollars.
This will be the growth of your invest in the bank as the years passes by and the amount of interest will be added to your principal amount.
As most of the Indian are middle class people and upper middle class people, with families. Where a father invests in FD for his sons or daughter s education , the retirees deposit FD in the bank to enjoy the interest rates as the monthly allowance. A family dreams to buy their own house all such dreams and desires are fulfilled by the fixed deposits. The fixed deposits which fulfills the dreams of many Indians.
Fixed deposits are also known as Term deposits, which gives higher interest rates than other saving investments.An investor can calculate the interest on FD’s using the FD calculator in which the principal amount(FD Amount), tenure(FD period), rate of interest on FD and compounding frequency.
The Compounding frequency depends on the type of fixed deposit you choose.Cumulative fixed deposit
In cumulative FDs the interest is calculated quarterly or yearly and added it to the principal amount and returned along with the Initial Fixed deposit amount at the time of maturity date.Non-Cumulative fixed deposit
In Non-cumulative FDs the interest is calculated as per the customers choice (monthly/Quarterly/Half yearly/Yearly) and paid to the customers in regular intervals. At the end of the maturity date customer gets the Principal Amount but the interest earned will be paid in a regular intervals.
Here is an example to understand better about the Cumulative and Non-Cumulative FDs.
If you are a customer of XYZ bank and it offers 8% interest rates on 12 months of tenure, you choose fixed deposit amount of Rs.25,000. The interest earned will be as mentioned below.
|Deposit Option||Interest payment frequency||Tenure||Deposit Amount||Rate of Interest||Maturity Amount||Interest Earned|
|Non-cumulative||Half yearly||12 months||Rs.25,000||8.00%||Rs.27,040||Rs.2040|
Examples explaining the calculation of interest on FD’s and the tax treatment so as to take out the effective ROR and the tax
The minimum deposit limit amount and maximum deposit limit of FDs in the bank. In some banks you can make minimum deposit of Rs.1000, as per some others banks policies the minimum amount will be Rs.10,000 or above.
The higher amount deposits of FDs are also known as Bulk deposits gives higher interest rates than regular fixed deposits.
The interest payment frequency for a FD is cumulative if the the interest is calculated annually and paid the time of maturity date.
If Non-Cumulative then the interest is paid on regular bases, where the compounding interval of interests will be monthly, quarterly, half-yearly or annually.
Senior citizens who are aged above 60 years will get an advantage in the banking services. In case of FDs senior citizens can an extra interest rate of 0.5 to 1% than regular FD interest rates.
The tenure for the banks starts from 7 days minimum to maximum of 10 years for FDs. But some banks even a tenure of 20 years. And after the maturity date the options for the customers. If he can just take interest and redeposit the principal amount. Other option for customer is that he can take out all the amount or reinvest.
The partial withdrawals is offered by only few banks, it gives a facility to withdraw some amount of fixed deposit and the rest is kept as FD as per the agreed norms and policies of the bank.
The premature withdrawal or breaking FDs before tenure will levy penalty on you by most of the banks. The penalty will be 0.5% to 1% of the interest rates.
Loans against FDs are provided by the banks if they need urgent liquid cash. Banks can give loans from 70% to 90% of the FDs principal amount and charge 2% to 3% more than FDs interest rates.
Tax deduction at source (TDS) is applicable when the interest earnings are more than Rs.40,000 annually earlier it was Rs.10,000. It is levied upto 10% and 20% if PAN number is not provided.
Income earned through FDs interest is treated as Income earned from other sources. And tax is levied on the customers as per the customer’s income bracket.
You can consider the 5 year period FDs which are used to save tax under section 80C. You can save the tax on 1.5 lakh investing it in tax saving FDs. It is applicable to the resident individuals and HUFs.
Note: The interest earned is taxable.
There are nearly 31.2 million Indian diaspora resides outside of India.NRI have many investment options in India. NRIs hold NRE, NRO accounts which is the popular options among the NRI to invest in NRE FDs and NRO FDs. It’s an ideal and attractive platform for them to invest and earn good returns.
Non-Resident External Fixed deposit is a kind of term deposit account that can be opened by a NRI and makes deposits from overseas in the foreign currency will be converted into indian rupees as per the exchange rates.
NRO Fixed deposit account is for the NRIs to manage the money earned by them in India through rent, pension, dividends or salary.
One of the popular invest option for the NRIs, it is mostly encouraged by the customers because of its safety and reliability even when the market is fluctuating and under high economic crisis.
Interest Rates on NRO FDs offered by different banks for the deposit less than Rs. 1 crore.
|Name of the Bank||Interest rates||Senior citizen Interest rates|
|Deutsche Bank||6.00% to 8.50%||6.50% to 8.75%|
|Dhanalakshmi Bank||5.00% to 7.10%||5.50% to 7.60%|
|Allahabad Bank||4.50% to 7.25%||4.50% to 7.25%|
|Axis Bank||3.50% to 7.25%||3.50% to 7.25%|
|Bank of Baroda||4.50% to 7.30%||4.50% to 7.30%|
|Bharatiya Mahila Bank||5.00% to 7.25%||5.50% to 7.75%|
|Kotak Mahindra Bank||4.00% to 7.25%||4.50% to 7.75%|
|Lakshmi Vilas Bank||5.00% to 7.80%||5.00% to 7.80%|
|Union Bank of India||5.25% to 7.25%||5.25% to 7.25%|
|Yes Bank||5.50% to 7.50%||N.A|
Taxation: There is no taxation on the principal amount, but interest earned is taxable.
Repatriation: Banks don’t offer repatriation on principal amount, but interest earned from the NRO FDs can be transferable to foreign accounts.
Indian banks offer many Fixed deposit options to the customers with high interest rates, flexible tenure ranges and different ranges of interest payment options. Many banks offer regular FDs and Tax saver FDs with high interest rates and extra benefits for the senior citizens.
1: Visit the banks official website, login with the your User Id and Password of the respective netbanking account.
2: Select the deposit option and select the Fixed deposit schemes.
3: Fill the required details in the respective fields such as branch of the bank, tenure of the FD, deposit amount.
4: Choose the bank account which you want to debit the amount and click proceed.
5: Verify the details and click ‘Confirm’.
6: Take a printout of the confirmation and check the confirmation SMS sent the registered mobile number.
1: Visit the nearest branch of the bank in which you want to open FD account.
2: Contact the bank executive and ask for the FD application form.
3: Fill the required details or you can ask the help of banks executive in filling the form.
4: Along with the form provide the required documents needed and deposit the amount you want to invest in FD.
5: The bank will provide FD receipt on the successful deposit of the money.
All the individuals, senior citizens and HUFs can apply for FD’s. Two types of proofs are need to open bank FD’s. Any of the following identity proof and address proof will be suffice.
Ans- Cumulative FD is the FD having interest is compounded every quarter or year and paid at the time of maturity.
Ans- No it can't be transferred normally.The only way you can do that is by closing your FD account yourself and then transfer.
Ans- Cumulative FD are better than traditional FD as interest rate is higher.
Ans- There are two options available with the nominee.One is to continue till maturity and second is to withdraw amount immediately.
Ans- There are two options , one of which is need to be selected while opening FD. One is FD is renewed automatically and second is amount gets transferred into savings account as stated in the form
Ans- Yes a person can open multiple accounts at different bank because there is no restriction from the RBI's end
Ans- The documents required by the bank for proof include:
Ans- Yes, a person can have a FD for 2 months. The tenure for a fixed deposit ranges between 7 days – 20 years and it varies from bank to bank.
Ans- Yes interest money can be withdrawn on a monthly basis.
Ans- Fixed deposit is an investment scheme free from market fluctuations. They are a low-risk, low-maintenance scheme which lets you deposit a lump sum at one go and earn appreciable income on the same. However, you cannot trade fixed deposits.
Ans- And If you are accounting for a business account, write the “name of the bank” and note “fixed deposit - maturing on.
If you are accounting for a personal account, write the “name of the bank” and note “fixed deposit - maturing on
Ans- Investing in the FDs of small finance banks can fetch you higher returns, investment in these avenues may be a bit risky compared to bank FDs.
Let Tax2Win experts file your belated return & claim your TDS
Has your take home salary increased? Check the impact of Budget 2023 on your incomeCheck Now→