Bank Term Deposit Scheme (FD): Tax Benefits & Application Procedure

Who can invest?

  • Any individual or a Hindu undivided family, may invest in bank term deposits with a scheduled bank, in his own/Karta’s name (single holder type) or jointly with another adult/minor individual (joint holder type) on either or survivor basis.
  • The scheme is also known as Tax Saving Fixed deposit for 5 years.

How to apply?

  • The investor should apply to the bank, in the prescribed form for Bank Term Deposit Scheme.

Amount of Investment

  • The investment shall be made for a minimum sum of Rs. 100 or in multiples thereof subject to a maximum of [1,50,000], during a financial year.

Nomination

  • The facility of nomination is available on all bank term-deposits, except those made/held by or on behalf of a minor.
  • Particulars of nominee may be furnished at the time of application or at any time thereafter before maturity.

Interest

  • The rate of interest on bank term deposit scheme shall be fixed by the bank concerned from time to time, and  shall be payable monthly/quarterly, or in lumpsum on maturity.

Issue of Deposit Receipt

  • The bank shall issue a deposit receipt bearing name, address, PAN and signature of the assessee alongwith other specified particulars.
  • In case interest is payable on maturity, the yearly rate of interest shall also be specified on the receipt.

Maturity Period

  • The term deposit shall mature on expiry of five years from the date of receipt.

Premature encashment

  • The premature encashment is  not permitted under bank term deposit scheme.
  • However, in the event of death of the first holder, the other joint holder may encash the deposit before its maturity, by applying to the branch manager alongwith proof of death of the first holder.

Transferability

  • A term-deposit may be transferred form one branch to another of the concerned bank, on an application by the investor.
  • Transfer of deposit from one bank to another shall not be permitted.

Income Tax Benefits of Bank Term Deposit Scheme

1 thought on “Bank Term Deposit Scheme (FD): Tax Benefits & Application Procedure”

  1. SIR,
    I AM A RETIRED EMPLYEE FOR CENTRAL GOVERNMENT .I HAD INVESTED 9,00.000 IN POSTOFFICE IN THE SENOIR CITIZEN SCHEME AND I HAD INVESTED THAT AGAIN IN POST OFFICE FOR 5YRS AS
    RECURRING SCHME.BOTH THE SCHEMES ARE FOR FIVE YEARS. SO IWANT TO KNOW THAT THIS WILL BE INCLUDED IN MY INCOME OF RS.3,00,000 EXEMPTION LIMIT.MORE OVER IAM ALSO GETTING INTEREST OF RS90,000/APPROX. IN THIS YEAR. SO PLEASE GUIDE ME HOW CAN I SAVE THE TAX AND ANY OTHER SCHEME FOR INVESTMENT IF I CAN SAVE THE TAX IF POSSIBLE

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