Generally, the interest you earn from investments in FD is taxable. But, there are tax-saving FDs too that allow you to get tax benefits up to 1.5 lakhs in a financial year on the invested amount. The fixed deposit tax benefit is covered under Section 80C of the Indian Income Tax Act. It is important to understand all benefits of tax saver FD to make smarter financial planning.
Other FD tax benefits include:
- You can appoint a nomination for your tax-saving FD
- If your total annual income does not fall under the taxable bracket, you can submit Form 15H/15G to avoid TDS deductions on the interest earned.
- You can open a tax-saving FD account for your children as well.
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