Offers
Rates
V-KYC
Debit Card Related
Credit Card Related
SA Welcome Kit 
Manage Mandate(s)
Get Mini Statement
categories
Bloggers
Blog collection
Press Release
Tax Planning with Fixed Deposits: A Comprehensive Guide
Posted on Friday, February 2nd, 2024 | By IndusInd Bank
Saving taxes is an important part of effective financial planning. Tax-saver fixed deposits allow investors to earn steady returns while reducing their tax liability. Optimizing available deductions can meaningfully boost overall returns. Read on to learn more about tax-saver fixed deposit interest rates and how they help save taxes.
What is a Tax Saver Fixed Deposit?
A tax saver fixed deposit is a special type of fixed deposit that offers taxpayers an annual income tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. By investing in a tax saver FD, individuals can claim tax benefits and earn steady returns from their investments.
Some key features of tax-saver fixed deposits include a mandatory 5-year lock-in period with no option for premature withdrawals. The interest rates remain fixed for the tenure and they do not have an automatic renewal facility. While the interest earned is subject to tax, the principal amount invested qualifies for a tax deduction.
Choosing IndusInd Bank for Your Tax Saver FD
IndusInd Bank offers highly competitive interest rates on its tax-saver fixed deposits. Along with market-leading returns, the bank provides customers with several value-added features and benefits:
Convenient Online Booking
Book your IndusInd Bank tax saver FD from the comfort of your home through a digital process involving a quick video KYC.
Flexible Interest Payout Options
Choose to receive your periodic interest monthly, quarterly, half-yearly or annually as per your liquidity needs and preferences.
Stability of Returns
As with all fixed deposits, the interest earned is protected from volatility in the financial markets.
Tax Benefits
Invest up to Rs. 1.5 lakh annually and enjoy tax deductions under Section 80C to maximize your post-tax returns.
Safety of Principal Amount
As one of India’s leading private banks, IndusInd Bank ensures complete security of investment capital through the five-year term.
Opting for IndusInd Bank’s tax saver FD allows investors to lock in attractive rates for 5 years while reducing their tax outgo legally. This helps maximize savings and financial preparedness for the future.
Income Tax Savings Calculation
To illustrate how a tax saver fixed deposit can optimize tax savings, let’s consider an example:
Mr. X invests Rs. 2 lakh in an IndusInd Bank 5-year tax saver fixed deposit.
- As per tax laws, Mr X can claim a deduction of Rs. 1.5 lakh under Section 80C for his tax-saver FD investment. This brings down his total taxable income.
Let’s assume his annual taxable income before the deduction is Rs. 5 lakh. After claiming the Rs. 1.5 lakh deduction out of the Rs 2 lakh FD investment, his revised taxable income is Rs. 3.5 lakh (Rs. 5 lakh – Rs. 1.5 lakh).
With a lower taxable income, Mr. X ends up paying lower taxes. Over the 5-year investment horizon, he effectively earns an additional post-tax return by claiming tax benefits through this strategic investment in a tax-saver fixed deposit.
Conclusion
Investing in a tax saver fixed deposit is a prudent way for individuals to benefit financially as well as utilize available tax exemptions legally. IndusInd Bank offers customers convenience, attractive returns, and security when opening a tax saver FD. By understanding products that provide dual advantages, taxpayers can optimize wealth creation and tax efficiency simultaneously.
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.
