A fixed deposit (FD), also known as a term deposit, is a financial instrument that allows a person to put money into a bank for a set period of time and earn interest on it. The interest rate is fixed when the deposit is opened and depends on the length of the term. At the end of the term, the depositor receives the original amount plus the interest.
Here are some things to consider about fixed deposits:
Safety
FDs are considered one of the safer ways to invest money because the returns are fixed when the account is opened. Even if interest rates drop after the FD is opened, the depositor will continue to receive the interest rate that was set at the beginning.
Flexibility
FDs can be flexible, allowing depositors to choose short-term or long-term goals. For example, a short-term FD might be used for a goal that is only a few months away, while a long-term FD might be used for a longer-term goal.
Withdrawals
Depositors cannot withdraw money from an FD until the term ends, and if they do, they may have to pay a penalty to the bank.
Taxation
Interest earned from FDs is taxed at the deposit holder’s tax slab rate. Banks issue Form 16 A to customers each quarter as a receipt for tax deducted at source (TDS). If any tax is owed after TDS, the depositor is responsible for declaring it on their income tax return and paying it. To avoid TDS, depositors can submit Form 15 G if they are under 60 years old, or Form 15 H if they are over 60 years old, when they open the FD and at the beginning of each financial year.
You have reached the requests limit for your current plan. Upgrade now to increase your requests limit to 100.Upgrade to 100 requestsCancel
You have 0 requests remaining.Upgrade now