You can now get up to 9% interest on fixed deposits: Here’s all you need to know

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February 21, 2017 1:05 PM

After demonetisation, banks were flush with funds and everyone was expecting them to lower deposit rates also. But that has thankfully not happened so far and some banks are even offering up to 9% interest on their fixed deposits.

bank fixed deposit, fixed deposit, interest rate, savings, money, taxation, TDSPeople who are not willing to take risk and also want to gain high interest rates on their investments can invest in these fixed deposits.

After demonetisation, banks were flush with funds and everyone was expecting them to lower deposit rates also. But that has thankfully not happened so far and some banks are even offering up to 9% interest on their fixed deposits.

People who are not willing to take risk and also want to gain high interest rates on their investments can invest in these fixed deposits. Investing money in fixed deposit ensures a guaranteed return for a particular period of time, which means that it is an instrument where you exactly know the worth of your invested amount.

Fixed deposits are also known as term deposits, so one should not get confused between the two terms. Generally, FD’s give you a return ranging from 7% to 8%, but some banks have started giving 9% return on an investment made for 12 months or less than 24 months.

Are bank FD’s insured?
Bank FD’s are safer than post office saving instruments because their investments are covered under DICGC (Deposit Insurance and Credit Guarantee Corporation) were investments are insured up to Rs 1 lakh. Protecting the interest of consumers, every bank is covered under DICGC.

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Is there any tax benefit?
Apart from providing assured returns, the investment made in fixed deposits helps you to avail tax benefit for Rs 1.5 lakh under section 80C of the I-T Act. Make sure that you have made an investment in a 5-year FD to avail the tax benefit where 5 years is the lock-in period of that FD to get matured.

What are the current fixed deposit rates provided by banks?
Commercial banks, small finance banks, and other banks have come up with interesting returns which can help you to accumulated wealth for your short term financial goals and those who have long-term financial goals can go with 5-year FD’s or more and earn a decent guaranteed return over a period time.

Bank offering highest interest rates on FDs (for non-senior citizens)

FD rates of commercial bank deposits over 1, 3, 5, 10 and 15 year period (for non-senior citizens)

FD rates of small finance banks (for non-senior citizens)

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What precautions need to be taken while investing in FD’s?

Before making investments in FD’s always make sure that you are well aware of the tenure of making investments and also the various tax implications which are applicable during the tenure. Tax is also deducted from FD’s interest rate as per the tax slab which reduces your overall net earnings on your investments, but that TDS is applied when your interest income exceeds Rs 10000. Further to save tax, you need to declare your interest income while filing tax declaration every year.

If the overall income does not exceed your taxable limit, in such a case investors can submit Form 15G (below the age of 60) or Form 15H (above the age of 60) to avoid TDS.

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