Fixed deposit also known as term deposit, is a financial product offered by the banks for investment to their customers. Banks offer higher interest rate on FD account investments than that of on savings account. There is no lock-in period in FD except for Tax-saver FDs. FD Investment is more favoured by those investors who want safer and easy to handle investment option. Its tenure ranges between 7 days and 10 years.
You can achieve different financial objectives by investing in FDs. FD account holder can avail loan against his/ her fixed deposit account at lower interest rate in case of emergency of funds. Investors can also close the fixed deposit account prematurely i.e. before the tenure ends by paying a certain penalty.
Tax rebate u/s 80C of Income Tax Act is also available, if you invest in an FD at least for 5 years or more. This rebate is available upto Rs 1.50 lakhs per financial year at present. Banks offer more returns to their senior citizen clients. Senior Citizens get at least 0.50% to 1% more interest on bank FDs than that provided to non-senior citizen customers.
(1) Taxability on FD
Interest income arising out of an FD is taxable according to tax slab of the investor. If you are in 20% tax slab, you need to pay 20% tax on interest income of your FD.
(2) TDS Applicability
TDS will be applicable when the interest earned on an FD is beyond Rs.10,000 in a given financial year (from April 1 to March 31).
(3) TDS Applicability for Senior Citizen
For Senior Citizens (who are 60 years or older), TDS will be deducted only when the interest income exceeds Rs.50,000 in a given financial year.
(4) TDS Rate
If you have interest income of Rs.10,000 in a given financial year, TDS at the rate of 10% will be deducted by the bank.
(5) Increased TDS Rate
In absence of a valid PAN or if you fail to provide the PAN information to the bank/ post office, TDS at the rate of 20% is made which is 10% more than the standard TDS rate.
(6) Avoiding TDS on Fixed Deposits
Whenever the interest income is over Rs 10,000 in a given financial year, banks deduct TDS. One can avoid such deduction by submitting Form 15G/ 15H, if one's income is non-taxable.
(7) TDS on Joint FD Account
For a joint FD account, TDS will only be deducted against the primary (first) account holder as interest income will be treated to be earned by him/ her and not by the joint holder. Therefore, the joint holder of FD will not have any TDS related issue.
(8) Issuance of TDS certificate
Banks generate and send TDS certificates to the FD account holders mentioning the amount of deduction and the rate of deductions that are made.
(9) Time of Deduction of TDS
Deduction of TDS is made either at the end of a quarter or before paying the interest to the FD Account Holder. It varies from bank to bank.
(10) Refund of TDS
If the tax liability of the FD Account Holder has not arisen but bank has deducted TDS on the interest earned on his/ her FD account then the person can claim refund of TDS while filing of income tax return (ITR).
The highest interest rate is offered by Deustche Bank (for 5 years) at 8.25% and IDFC Bank (for 5 years) at 8.25% followed by Suryoday Small Finance Bank (for 5 years) at 8.25%.
|Bank||Maturity Period||Interest Rate (p.a.)||Calculate|
|Suryoday Small Finance Bank||5 Years||8.25%|
|Abu Dhabi Commercial Bank||5 Years||7.65%|
|Utkarsh Small Finance Bank||5 Years||7.25%|
|Dcb Bank Limited||5 Years||6.95%|
|Bharatiya Mahila Bank Limited||5 Years||6.85%|
|Indusind Bank||5 Years||6.75%|
|Equitas Small Finance Bank Limited||5 Years||6.75%|
|Rbl Bank Limited||5 Years||6.75%|
|Yes Bank||5 Years||6.75%|
|Idfc Bank Limited||5 Years||6.75%|
|Allahabad Bank||5 Years||6.50%|
|Fincare Small Finance Bank Ltd||5 Years||6.50%|
|Au Small Finance Bank Limited||5 Years||6.50%|
|North East Small Finance Bank Limited||5 Years||6.50%|
|Capital Small Finance Bank Limited||5 Years||6.25%|
|Deustche Bank||5 Years||6.25%|
|Standard Chartered Bank||5 Years||6.00%|
|Laxmi Vilas Bank||5 Years||6.00%|
|Esaf Small Finance Bank Limited||5 Years||6.00%|
|A B Bank Limited||5 Years||6.00%|
|United Bank Of India||5 Years||6.00%|
|Ujjivan Small Finance Bank Limited||5 Years||5.80%|
|Bandhan Bank Limited||5 Years||5.75%|
|Catholic Syrian Bank Limited||5 Years||5.75%|
|Tamilnad Mercantile Bank Limited||5 Years||5.75%|
|Karnataka Bank Limited||5 Years||5.65%|
|Karur Vysya Bank||5 Years||5.65%|
|Federal Bank||5 Years||5.60%|
|South Indian Bank||5 Years||5.60%|
|Punjab And Sind Bank||5 Years||5.55%|
|Dhanalakshmi Bank||5 Years||5.50%|
|The Nainital Bank Limited||5 Years||5.50%|
|City Union Bank Limited||5 Years||5.50%|
|Axis Bank||5 Years||5.50%|
|Corporation Bank||5 Years||5.45%|
|Andhra Bank||5 Years||5.45%|
|Union Bank Of India||5 Years||5.45%|
|Icici Bank Limited||5 Years||5.35%|
|Hdfc Bank||5 Years||5.35%|
|Indian Overseas Bank||5 Years||5.35%|
|Canara Bank||5 Years||5.30%|
|Syndicate Bank||5 Years||5.30%|
|Vijaya Bank||5 Years||5.30%|
|State Bank Of Mysore||5 Years||5.30%|
|Idbi Bank||5 Years||5.30%|
|Bank Of Baroda||5 Years||5.30%|
|Jammu And Kashmir Bank Limited||5 Years||5.30%|
|State Bank Of Patiala||5 Years||5.30%|
|Dena Bank||5 Years||5.30%|
|State Bank Of Bikaner And Jaipur||5 Years||5.30%|
|State Bank Of Travancore||5 Years||5.30%|
|Oriental Bank Of Commerce||5 Years||5.30%|
|State Bank Of India||5 Years||5.30%|
|Punjab National Bank||5 Years||5.30%|
|Bank Of India||5 Years||5.25%|
|Dbs Bank Ltd||5 Years||5.20%|
|Indian Bank||5 Years||5.15%|
|Central Bank Of India||5 Years||5.10%|
|Bank Of Maharashtra||5 Years||5.00%|
|Uco Bank||5 Years||4.95%|
|Chinatrust Commercial Bank Limited||5 Years||4.75%|
|Kotak Mahindra Bank Limited||5 Years||4.50%|
|Hsbc Bank||5 Years||4.00%|
|Citi Bank||5 Years||3.90%|