Benefits of Tax Saving FDs Under Section 80C of the Income Tax Act

Posted on Tuesday, December 26th, 2023 | By IndusInd Bank

Tax-saving fixed deposits are an excellent investment instrument, combining competitive interest rates with tax benefits under Section 80C of the Income Tax Act. Key benefits include tax exemption on the principal amount up to INR 1.5 lakhs, guaranteed returns, high security, and ease of investing. These FDs are ideal for investors seeking assured returns and tax efficiency.

In the world of personal finance, a rupee saved is a rupee earned. Offering dual benefits of wealth creation and tax optimisation, tax-saving fixed deposits (FDs) emerge as a strategic asset for the discerning investor. They help increase wealth securely while reducing tax liability, enabling investors to create a well-rounded financial portfolio. Under Section 80C of the Income Tax Act, investors can claim a tax deduction on tax-saving FD investments.

These simple investments combine the security and predictability of traditional fixed deposits with the added advantage of tax benefits, presenting an ideal option for new-age investors seeking a harmonious balance of both. However, with a mandatory lock-in period and no premature withdrawals, these deposits are not suitable for investors looking for high liquidity or short-term investments.

Whether you are a seasoned investor or just beginning to chart your financial journey, understanding the nuances of tax-saving FDsis crucial for making informed investment decisions that align with your financial goals and tax-saving needs. 

Understanding Tax Saving Fixed Deposits

Tax-saving FDs allow investors to park a lump sum amount and earn a fixed interest income on the amount. This money is locked in for a period of 5 years. While tax-saving FDs are nearly the same as regular fixed deposits, their distinctive feature is the tax-saving advantage.

The interest earned on these deposits is taxable, but the invested amount can be claimed as a deduction from the gross total income, reducing the investor’s taxable income. Investors can enjoy a tax deduction of up to INR 1.5 lakhs under section 80C of the IT Act.

Since fixed deposits are not affected by market volatility, they are perfect for risk-averse investors seeking a steady and secure way to grow their wealth.

Benefits of Tax-Saving FDs Under Section 80C

Tax-saving fixed deposits offer a seamless blend of safety, attractive returns, and tax efficiency. Here are the key benefits that make them a favoured choice of many investors:

1. Guaranteed Returns

Unlike market-linked investments that are not without the risk of fluctuating returns, tax-saving FDs offer guaranteed returns at a fixed interest rate. This makes them an ideal option for conservative investors seeking stability and predictability in their investments.

2. Safety and Security

Tax-saving FDs are highly secure. They carry negligible risk of default, ensuring the safety of your money.

3. Ease of Investment

Opening a tax-saving FD is a hassle-free process. With IndusInd Bank, investors can book their deposits through an online, paperless process in just a few steps:

• Register using your mobile number.
• Furnish your Aadhar and PAN card details.
• Enter your desired investment amount and complete a video KYC.
• Receive digital account confirmation and start growing your money.

Key Features of IndusInd Bank Tax-saving Fixed Deposits

Tax-saving FDs from IndusInd Bank come with lucrative interest rates and a host of features catering to the unique financial needs of the new-age investor. Key features include:

Hassle-free Instant Booking

Book your FD online instantly through a quick, paperless process.

High-Interest Rate

Enjoy the most competitive interest rates on the market.

Multiple Modes of Interest Pay-outs

Select from multiple interest payment options – monthly, quarterly, half-yearly, yearly, or at maturity.

Video KYC

Complete your KYC from anywhere in the world through a seamless video KYC process.

Maximise Your Investments with IndusInd Bank Tax-Saving Fixed Deposits

As illustrated above, tax-saving FDs are an excellent investment instrument for growing your wealth while minimizing tax liabilities. Marked by attractive features such as competitive interest rates, a hassle-free opening process, and guaranteed returns, an IndusInd Bank tax-saving fixed deposit ensures that your investment journey is truly rewarding.

Open an FD online through the website, Indus Mobile App, or Indus Net to enjoy a paperless process and an unparalleled investment experience.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.