WHAT ARE FIXED DEPOSITS?• Fixed Deposit is a contractual right provided by Indian banks whichprovides investors with a higher rate of interest than a regular savingsaccount• Fixed Deposit may or may not require the creation of a separate account
ARE FIXED DEPOSITS SAFE?• In India Fixed Deposits are considered to be very safe investments andthey are used to denote a larger class of investments with varying levels ofliquidity• Fixed deposits are a high-interest-yielding Term deposit offered by banksin India. Fixed Deposits are recommended by maximum no. of wealthmanagers.
WHY FIXED DEPOSITS OVER OTHER OPTIONS• To compensate for the low liquidity, Fixed Deposits offer higher rates ofinterest than saving accounts. Generally, the longer the term of deposit,higher is the rate of interest• Owing to the current dynamics in economic conditions and financial crisis,Fixed Deposits are the most preferred option over Stock Investments, GoldInvestments and other forms of investment
BENEFITS OF FIXED DEPOSIT• Customers can avail loans against Fixed Deposits up to 80 to 90 per cent ofthe value of deposits. The rate of interest on the loan could be 1 to 2 percent over the rate offered on the deposit.• Non Resident Indians and a Person of Indian Origin can also open theseaccounts
TAXABILITY OF FIXED DEPOSITS• Fixed Deposits also offer income tax and wealth tax benefits.• Tax is deducted by the banks on FDs if interest paid to a customer at anybranch exceeds Rs 10,000 in a financial year. This is applicable to bothinterest payable or reinvested per customer or per branch.• Banks issue Form 16 A every quarter to the customer, as a receipt for TaxDeducted at Source.