Fixed Deposits#
Types of FDs#
1. Bank Fixed Deposits
- Commercial banks
- Post office FDs
- Tenure: 7 days to 10 years
2. Corporate Fixed Deposits
- Non-convertible debentures
- Higher interest rates
- Higher risk
3. Tax-Saving FDs
- 5-year lock-in
- Deduction under 80C
- Up to ₹1.5 lakh
Interest Rates#
| Type | Rate (approx.) |
|---|---|
| Bank FD | 6-7% |
| Corporate FD | 7-9% |
| Senior Citizen FD | 7-8% |
| Tax-Saving FD | 6.5-7% |
Tax Treatment#
- Interest taxed as per slab
- TDS @ 10% if interest > ₹40,000
- No TDS for senior citizens
- Form 15G/15H to avoid TDS
Premature Withdrawal#
- Penalty usually 0.5-1%
- Interest paid at savings rate
- Not allowed for tax-saving FDs
Benefits#
- Guaranteed returns
- Low risk
- Flexible tenure
- Loan against FD available