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Income Tax

Tax Saving Fixed Deposit| With Automated Income Tax All in One for the Govt & Non-Govt Employees for the F.Y. 2021-22 as per Budget 2021

Tax Saving Fixed Deposit | To encourage retailers to reduce the interest on fixed deposits, the Ministry 

of Finance announced in 2006 Therefore, that all fixed deposits with a term of fewer than 5 years would be eligible 

for exemption under Section 80C of the Income Tax Act. This type of fixed deposit is popularly known 

as tax saving fixed deposit. 

Fixed Deposit

 In other words, This announcement was made by the notification dated 23/2006, through which the Ministry of Finance announced the Bank Deposit Term Scheme 2000-2006. This scheme sets clear guidelines for investing in this type of tax saving fixed deposit.

You may also, like- Automated IncomeTax Preparation Excel Based Software All in One for the West Bengal Government Employees for the F.Y.2021-22 [ This Excel Utility can prepare at a time your Income Tax Computed Sheet as per Budget 2021 + Individual Salary Sheet + Individual Salary Structure as per the W.B.Govt Employee’s Salary Pattern + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 16 Part A&B and Part B for F.Y.2021-22]

Tax Savings with Fixed Deposit including Salary Structure of the W.B.Govt Employees

Fixed Deposits for Tax Preservation: Guidelines

However, The Ministry of Finance has laid down the following guidelines for investing in tax saving fixed deposits.

 For instance, Maturity: 5 years

  • Minimum investment: Rs. 100 and more of it
  • Maximum investment: Rs. 1,50,000 (Circular No. / 2013/2017, F.No.142/09/2017  Increased from Rs. 1 lakh to Rs. 1.5 lakh as per TPL)
  • To discount available: Private, HUF
  • Mat Premature withdrawal: Not available
  • Advantage against this FD: Not available
  • Interest rate: Paid by the bank from time to time
  • Tax on interest earned: According to individual income tax slab rate
  • TDS 10% on Interest

Above all, The interest rate paid on these tax-saving fixed deposits is decided by the bank with which the investment is made. You can check the rates offered by different banks as given below table-

Fixed Deposit interest Rates 2021

Last Updated 16th Jul 2021

In addition, The fixed deposits interest rate varies on factors such as Government policies, economic conditions and liquidity conditions in the market.

BanksFD Interest RatesSenior Citizen FD Interest RatesTenure
HDFC6.20% – 6.65%6.00% – 6.50%33 months to 99 months
PNB Housing Finance5.90% – 6.70%6.15% – 6.95%12 months to 120 months
Bajaj Finance5.65% – 6.50%5.90% – 6.75%12 months to 60 months
SBI2.90% – 5.40%3.40% – 6.20%7 days to 10 years
IDFC First Bank2.75% – 6.00%2.75% – 6.50%7 days to 10 years
Axis Bank2.50% – 5.75%2.50% – 6.25%7 days to 10 years

You may also, like- AutomatedIncome Tax Arrears Relief Calculator U/s 89(1) with Form 10 E for theF.Y.2000-01 to F.Y.2021-22 as per Budget 2021

Fixed Deposit and Income Tax Form 10 E

After that, Effective annual the interest rate on fixed deposits for tax protection

Similarly,The following table shows the effective interest rates on such fixed deposits at an interest rate of 8.5%. 

S. No.ParticularsAmount (Rs.)
Slab Rate – 30%Slab Rate – 20%Slab Rate – 10%
AAmount Invested10,00010,00010,000
BImmediate Tax Saving         (assuming 30% Slab Rate)309020601030
CEffective Investment  (A-B)691079408970
DMaturity Amt of Original Investment (Interest @8.5% p.a.)13,38213,38213,382
ETotal Pre-Tax Benefit on Deposits (D-C)6,4725,4424,412
FEffective Annual Yield (5 years)14%12.50%10.50%

In conclusion, To invest in such tax-saving fixed deposits which are allowed as a discount under section 80C, the investor has to submit an application for the same at the time of deposit and also submit a copy of his PAN card to the banker.

These investments can be made in either a single name or a joint name. Investing in a joint name, only the 1st holder can claim this discount and the 2nd holder will not be able to avail the benefit of Section 80 discount for investing in this type of tax saving fixed deposit.

You may also, Like- Automated Income Tax Preparation Excel Based Software All in One for the Non-Govt Employees for theF.Y. 2021-22[ This Excel Utility can prepare at a time your Income Tax Computed Sheet as per Budget 2021 + Individual Salary Sheet + Individual Salary Structure as per the Non-Govt Concernd Salary Pattern + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Form 12 BA U/s 17(2) + Automated Income Tax Form 16 Part A&B and Part B for F.Y.2021-22]

Salary Structure of the Non-Govt Employees

The difference between tax-saving fixed deposit vs. PPF investment

 PPF, as well as tax-saving fixed deposits, are both regular income-earning investments that give the investor a predetermined guaranteed return. In addition, an investor can also claim a maximum discount of Rs. 2,000 / -. 50 150,000 to invest in any one of these investments.

However, there are some differences between PPF and Tax Saving Fixed Deposit which are discussed below: – 

ParticularsTax Saving Fixed DepositPPF
Maturity5 years15 years
The deduction is available u/s 80CRs, 1,50,000Rs. 1,50,000
Interest RateFixed by the Bank*Fixed by the Govt*
Tax on Interest earnedAs per Income Tax Slab RateExempt
Premature Withdrawal FacilityNot AllowedMaturity after 5 yearsAvailable from 5th year onwards but only to a certain extent
Loan FacilityNot AllowedMaturity after 5 yearsCan be availed from 3rd year onwards

(* Although the interest on tax-saving FDs and PPFs is fixed by different companies, they are almost the same with only slight differences)

PPF is a better instrument than tax-saving fixed deposits. However, the only drawback of PPF is the long maturity period. If a person feels comfortable in the long run, he should opt for PPF for tax saving fixed deposit.

And if you have already invested a maximum of Rs 1.5 lakh in PPF, after which you can invest in tax saving fixed deposit.

Download Automated Income Tax Preparation Excel Based Software All in One for the Government &Non-Government (Private) Employees for the F.Y. 2021-22

Income Tax Salary Statement
Income Tax computed Sheet
Income Tax Form 10 E

Feature of this Excel Utility:-

1) This Excel utility prepares and calculates your income tax as per the New Section 115 BAC (New and Old Tax Regime)

2) This Excel Utility has an option where you can choose your option as New or Old Tax Regime

3) This Excel Utility has a unique Salary Structure for Government and Non-Government Employee’s Salary Structure.

4) Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the F.Y.2000-01 to F.Y.2021-22 (Update Version)

5) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22

6) Automated Income Tax Revised Form 16 Part B for the F.Y.2021-2

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