
When investors talk about tax-saving financial products, they generally do not consider a fixed deposit. This is because not many are aware that it is possible to get tax benefits by putting money in a tax-saving fixed deposit. Read on to know about this investment product in detail.
What is a tax-saving fixed deposit?
This investment option is like any other fixed deposit where you put in a lump sum in the account and earn interest on your capital. But there are two key differences between tax-saving fixed deposits and other regular fixed deposits—a five-year lock-in period and tax benefits.
The money you invest in a tax-saving fixed deposit (FD) is tax-deductible up to INR 1.50 lakhs under section 80C of the Indian Income Tax Act, 1961. You can also add a nominee to your tax-saving FD account, who will be entitled to withdraw the fund prematurely if an unfortunate event leads …
