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.
Top 5 Rules for Fixed Deposit Investment
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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April 8, 2009 at 3:30 am
Hi.. nice tips there, like it. I think people nowadays should start learning how to invest in a smart way.
April 8, 2009 at 3:35 am
Nice tips, Krishna!
I’m planning for one and I’ll keep these things in my mind.
April 8, 2009 at 4:11 am
HI Vince & Sri,
Thank you for the comments.
April 23, 2009 at 3:20 am
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…..
August 4, 2009 at 7:15 am
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.
February 7, 2013 at 7:29 pm
HI JOSHI, YOU CAN GO AHEAD.
August 7, 2009 at 11:07 pm
HI kalpesh joshi,
You can deposit in the another branch to avoid the TDS.
Thanks,
Krishna
June 25, 2012 at 6:31 am
Hi krishna
i need your help, today i recieved a letter from SBI that they have didcuted certain amount as TDC against my FD even though i have submitted the form no. 15 G. so why they have deducted. Seconadly i don’t have any proof of submission at present with me, will you please confirm is bank is giving any proof against submission, in my case they can say that they have not reciceved the same. Please giuide me is there any system the get back those deducted money.
waitin for your reply
raja
June 26, 2012 at 4:53 pm
Hello Rajasen,
This happens with the bank. Sometimes they forget to submit the form 15G then th TDS would be deducted. The only way is to apply for the refund.
Thanks,
Krishna
January 17, 2010 at 10:14 pm
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.
August 31, 2010 at 9:39 am
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
October 9, 2010 at 7:33 am
sir iam a housewife,ihave fd in bank in different ways. now bankpersonal want to tax from my interest.
February 7, 2013 at 7:34 pm
NEELU, MAKE SURE THAT YOUR FD INTEREST IN ONE BRANCH OF THE BANK NOT EXCEEDING Rs.10,000/-.GIVE PAN CARD NO.AND FORM G OR FORM H AS APPLICABLE.
THANKS.
November 15, 2010 at 8:06 am
I found your article very helpful. But i have one specific query which i will put in front of u like a case study: suppose my sister is employed and she is earning Rs 100000/- per annum which is anyway non taxable. Now if she deposits in her account say Rs 200000/- for some period and with some interest rate such that the interest comes out to be more than 10000/- then whether tax will be deducted at source (ie bank) automatically? my reason for not deducting any tax in her case is that her total income (including salary from office and interest from FD) is not taxable as the slabs are more relaxed for females. if the total salary and interest crosses the limit in the salb then its justified to pay tax. what is your opinion in this case? regards.
February 18, 2011 at 2:03 am
i want to know all schemes for MIS IN COMPANIES ICICI/HDFC/LIC,.HOW I CAN INVEST.
March 10, 2011 at 9:10 am
This is a good article.I have two question to ask.
1) I have three FD.All of them are from the same nationalized bank.Two of them are from the same branch whose interest this year are 5634 and 6522 respectively.The third is from a different branch having interest 5600.Both the branches are CBS(core bank solutions).Do I have to pay tds ?
2) Is the tds calculated on total interest received on maturity or only interest for that year ?
Thank you in advance.
April 6, 2011 at 10:23 pm
Splitting fixed deposit in the same bank, under a same account does not help as all the deposits under one customer ID(even if the deposits are in different branches of the same bank) are considered to arrive at the total interest and TDS requirement.
April 10, 2011 at 1:32 am
Nice Article
April 18, 2011 at 8:33 am
I’ve a FD at ICICI which is matured on 11.4.2011 .Initial deposit was 1 lakh and tenure was from 8.11.2008 to 11.4.2011 ie.for 2year 5 month 9 days .the matured amount is 128734.00.when i went to bank to credit this amount to my savings a/c, they say TDS will be deducted Is their statement justified? should i ask for the reason behind? pl.clarify .
July 9, 2011 at 1:38 am
i wont to make FD of 20L, and do not have any other income can i fill 15G form so i can get not tax deduction
July 20, 2011 at 11:44 am
Dear Sir,
I want to invest Rs.1 Crore for a period of 10 years, please suggest the best possible options.
Thanks & Regards
July 29, 2011 at 10:44 pm
Now i am earning Rs. 7000/- per month. if i am investing 10000/- as a fixed deposit for a period of 15 years. what i will get the return (principle+interest) after 15 years.
And also i need explanation of fixed deposit
August 17, 2011 at 11:54 am
mr krishna sir
i am uday many of them friends are there they are illiterates thy are jobless they are having sum of 1 crore rupees they are planning to do a business in fd amount interest if he want to keep the amount what is the amount limit to keep in FD after how much term the assured amount will get matured yearly interest amount should not cross more than 1 lakh if it cross it is for taxable amount then i want to know how to split the amount in different bank whether in different a/c name holders nor his same account name different branches bank please clarify me this doubt
September 18, 2011 at 10:44 pm
hi all, im working in a private co.in pune.its a agriculture co. it gives around 16% returns on f.d and their are various plans,you can invest monthly,quarterly,half-yearly,yearly.also u can get monthly returns in some plans.if interested call or mail me.mob-9764264109
November 9, 2011 at 12:11 am
i am ready to Fixed deposit of Rs.5Lakh in Karnataka Bank for 2 Years
they are deducting any Tds,
December 28, 2011 at 8:42 am
Dear sir,
I would like to open a fd in punjab national bank, for a peroid of 1 yr. I have an sb a/c in pnb. Can i make any extra investment to the same fd.
April 27, 2012 at 2:34 am
sir,I have not PAN ,ihave FD on which i earned 9800/- in one year interest will bank deduct TAX
April 28, 2012 at 2:10 am
i have fixed in icici rs 100000/ in nre fixed deposit for 390 days. i want to widraw after 8 monts, how much ,i will get.
July 9, 2012 at 1:07 am
I have not been an income tax assessee so far as my income is well below 2.5lakhs. However, i have received substantial sum which i have deposited in 7 years scheme of FD (cumulative), which will double the maturity value.
The banks have deducted 10% tds on the accured interestm but not paid (will be paid on due date after 7 tears)
Now I am to file income tax returns after paying the tax on notional income(interest not due/received).
Your article does not cover this situation. Can you please cover this in your article