Top 5 Rules for Fixed Deposit Investment
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Top 5 Rules for Fixed Deposit Investment
In this article I will be writing about the important points to consider while opening the fixed deposit account. I have already published many articles explaining the fixed deposit account and the tax savings involved with the fixed deposit schemes. This post is intend to list some of the key points which you must be aware before opening the fixed deposit account. I hope you will like the post and will be more informative. Please post your feedback and add if you have any points in your mind. If you like the post, subscribe to our future articles here.
1. Split Your Fixed Deposit
You have to split the fixed deposit to avoid the TDS(Tax deduction at Source). If the total interest is more than Rs.10000 in a branch for the specific year, then TDS must be paid. To avoid that please split the fixed deposit and invest in the different banks.
2. Plan the Tenure
It is important to plan the number of years you want to keep the deposit. Banks will charge as penalty if you are foreclosing the deposit account. Please ask the banker for penalty applicable for the foreclosing.
3. Appoint a Nominee
Always appoint a nominee for your fixed deposit to avoid the hassle free release of amount after you. If you are not appointing any nominee, they will have to bring any of the heirs proof certificate to receive the money.
4. Check the compound interest policies
This is one of the important consideration while opening a fixed deposit account. When you hear the rate of interest is 8.0% p.a., first thing you have to ask whether it is compounded quarterly, half-yearly or yearly. If the interest is compounded quarterly, then the return rate of interest will be potentially more than the actual one.
5. Learn about taxable FD investment
If you are not aware that the FD savings can be used for tax benefits, please learn about the tax savings on fixed deposit. It has limitation of Rs.100000 under section 80c. Might be useful if you are looking for the same one.
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10 Comments on this post
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Vince Ong said:
Hi.. nice tips there, like it. I think people nowadays should start learning how to invest in a smart way.
April 8th, 2009 at 3:30 am -
Sri said:
Nice tips, Krishna!
I’m planning for one and I’ll keep these things in my mind.
April 8th, 2009 at 3:35 am -
krishnas said:
HI Vince & Sri,
Thank you for the comments.
April 8th, 2009 at 4:11 am -
mitul parekh said:
I have fixed deposit with bank Rs.1 lacs with interest rate 11.50% for 390 days period from 7-11-2007 to 1-12-2008. I was interest earned Rs.11107/- ( Interest amount break up from 01-11-07 to 31-03-08 – Rs.4043 & from 01-04-08 to 01-12-08 Rs.7064 i.e. Rs. 4043 + Rs.7064 = Rs.11107 /- ) but that time there is no TDS cut.because financail year for interestaamount comes less tha Rs.10000/- &
After I have again this FD renewal for 390 days at @ 11.50% from 1-12-2008 to 26-12-2009 for interest earned Rs.12888 /-.( interest calculation from 01-12-08 to 31-03-09 Rs.3860 /- & from 01-04-09 26-12-09 Rs.9028/-) But After I received bank statements for TDS from 01-01-09 to 31-03-09. This time TDS cut Rs.1126/- i.e. for earlier FD for interest was earned Rs.7064 from 01-04-08 to 01-12-08 & new renewal FD for interest earned Rs.3860/- ( i.e. 7064 + 3860 = 10924 & TDS cut for Rs.10924 * 10.3% = Rs.1126 /- ). I understand for How to TDS cut.
BUT my main query is :
After 2nd interest amount shown Rs.8929 instead of Rs.9028 because when branch provided FD receipt that maturity amount shown 112888 ( 100000+12888) but now I see in finacle system amount reflected Rs.112789 ( 100000+12789)…..my clarification is why amount is Rs.12789 instead of 12888 i.e. amount reduce Rs.99.
I speak with branch then branch said for after tds cut but maturity days till pending for 270 days then bank will interest amount cut based on TDS amount Rs.99 i.e.( Rs.1126 * 11.8% *270 days / 365 days is comes Rs.99/-) ( TDS amount * (FD rate + Education cess) * remainig maturity days after dedcuting TDS amount & devided by total no. of days )
he interest quantum on the TDS amount is reduced from the maturity value & TDS padi to GOVT.
Is it correct for bank dedution for additional interest amount cut….is it any comes under income tax rule ???
Please provide clarify this query as soon as possible….I hope you understand my this query…..
April 23rd, 2009 at 3:20 am -
kalpesh joshi said:
Dear sir, i have fds in punjab nat bank which are generating interest upto 9500 in this financial year.If i do further fds in this branch then it would attract tds.so can I do fd in anither BRANCH of pnb in my city under the same customer id & still be saved from tds.kindly reply soon sir.THANX.
August 4th, 2009 at 7:15 am -
krishnas said:
HI kalpesh joshi,
You can deposit in the another branch to avoid the TDS.
Thanks,
KrishnaAugust 7th, 2009 at 11:07 pm -
Chandrakumar said:
I am a senior citizen. I am spending Rs.3000 every month for the education of my grand child. I get this money every month by way of interest from my long-term investment (more than 36 months) of just over Rs.3 lakh in a Kerala State Treasury Deposit Scheme.
Now I want to make this a permanent feature. i.e. my grand child should continue to get this Rs. 3000 every month till his death.
Please advice me the course of investment (any scheme) I should adopt for achieving this target.
January 17th, 2010 at 10:14 pm -
Santosh Desai said:
I have fixed deposits in a Nationalised bank which has CBS implemented.
Now the bank is deducting TDS by clubbing all the deposits in a customer ID though the deposits are in different branhces.
Whether this practice is correct?
Regards
Santosh Desai
August 31st, 2010 at 9:39 am
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