How to Open Tax-Saver FD Online

Tax-saver FDs are special fixed deposit accounts that offer dual benefits – they help you save on taxes and provide an opportunity for wealth growth. These FDs come with a lock-in period of five years, during which you cannot withdraw your deposit.

Here are some key features of Tax-Saver FDs:

Tax Saving on Investment

You can save on your tax outgo with such FDs under Section 80C of the Income Tax Act. However, you can avail this benefit only if you're a part of the old tax regime.

Higher Interest Rates

Tax Saver FDs come with a higher interest rate compared to regular Savings Accounts. However, the lock-in period is 5 years, meaning you cannot withdraw the deposit amount before the stipulated period.

Minimum and Maximum Amount

You can invest a minimum amount of ₹1000 and a maximum amount of ₹1,50,000 in a financial year (FY) towards a Tax-Saver FD. This investment qualifies for tax exemption under section 80C.

Eligibility

Tax-Saver FDs are available for resident individuals and Hindu undivided families (HUFs) only. Non-resident Indians (NRIs) and foreign nationals are not eligible to open this account.

Interest Pay-out Options

Most banks offer three interest payment options for tax-saver FDs – quarterly, monthly, or at maturity. You can choose the option that suits your financial needs.

Now, let's dive into the process of opening an online tax-saver FD with your bank.

Tax Saver FDs can help you with both - save tax and growing your wealth. However, as pointed out before, you can deposit only up to ₹1.5 lakh in such FDs. Also, there's limited liquidity option compared to other Fixed Deposits. However, such FDs can be an excellent instrument to park your money for the long-term and reap the benefits of higher interest rates and the power of compounding. Consider all these factors before investing in Tax-Saver Fixed Deposits.

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