Before doing FD, keep in mind 6 things including its duration and the tax levied on it

 Before doing FD, keep in mind 6 things including its duration and the tax levied on it

Fixed deposit i.e. FD is considered to be a good investment tool as it is safe and gives a fixed return, but it is also not advisable to invest in FD without thinking. There are a number of requirements to consider when making an FD, including its duration and the penalty for breaking the FD. Today we are going to tell you about 6 such things …

It is necessary to choose the right tenor

Before investing in FD, it is important to think about its tenure. This is because if the investor withdraws before maturity, he will have to pay a penalty. FD will have to pay a penalty of up to 1% for breaking it before it matures. This can reduce the total interest earned on the deposit.

Not investing all the money in one FD

If you are thinking of investing Rs 10 lakh in FD in one bank, instead invest in 8 FDs of Rs 1 lakh and 4 FDs of Rs 50,000 in more than one bank. In the meantime, if you need money, you can manage the money by breaking 8 FDs in the middle according to your need. Your second FD will be safe.

Interest earned on FDs is taxable

Interest received from your FD is taxable as per the Income Tax Slab. If the interest earned on FD is above Rs.10,000 in a financial year, a TDS deduction is levied on it. It will be 10% of the total interest earned. The limit for senior citizens is 50 thousand. If your income is less than the taxable range, you can submit Form 15G and Form 15H to the bank for non-payment of TDS on FD.

Withdrawal of interest

The bank had the option to withdraw interest on a first quarter and annual basis. Monthly withdrawals can now be made at some banks. You can choose it according to your need.

Penalty will be given for breaking FD ahead of time

If you break the FD ahead of time, you will not get interest at the rate at which you opened the FD. For example, you get 6% interest per annum on FD of 1 lakh, but if you break it after 6 months, you get only 5% annual interest on 6 months FD, in which case the bank will pay interest at 5% on your money, 6% Will not pay interest.

According to the rules of SBI, the country’s largest bank, if a person gets an FD of up to Rs 5 lakh, he will have to pay a penalty of up to 0.50 per cent for breaking the FD before it matures. Thus on FDs above Rs 5 lakh and less than Rs 1 crore, 1 per cent penalty has to be paid on premature break. After fixing the interest for the period, you are paid by deducting 0.50 per cent or 1 per cent interest on the amount of FD. Most banks charge a penalty of up to 1 percent.

Loans can be taken on FD

You can also take a loan on your FD. Under this you can take a loan up to 90% of the value of FD. Suppose your FD is worth Rs 1.5 lakh then you can get a loan of Rs 1 lakh 35 thousand. If you take a loan on FD, you will have to pay 1-2% more interest than the interest earned on a fixed deposit. For example, if you are getting 4% interest on your FD, you can get a loan at an interest rate of 5 to 6%.

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