One of the most popular options for investors looking to avail the benefits under Section 80C of the Income Tax Act, 1961, is investing in tax-saving Fixed Deposits (FDs). Many people choose FDs for investment due to the secured nature and high return compared to savings accounts.
Several leading banks also offer FDs with the dual benefit of saving tax and higher returns. The tax-saving FDs are also less risky compared to equity-linked products or capital market instruments. However, it is important to note that various tax deductions and exemptions, including the 80C investments, are only available under the old tax regime.
The benefits of Section 80C are not available under the new tax regime, which has become the default from FY24. Apart from tax benefits, many banks also offer higher interest rates for senior citizens on FDs of various tenures.
You can open a tax-saving FD account with the same bank where you already have a savings account or with another bank, as long as the latter allows such investments without requiring the opening of a savings account.
First, you will be required to complete the know-your-customer (KYC) procedure. To complete the KYC process, you must provide self-attested copies of your ID proof (PAN), address proof (Passport, Driver’s Licence, etc.), and passport-sized photographs. Before bank officials accept the KYC form, they may verify the original documents.
India’s largest private sector lender, HDFC Bank has recently launched tax-saving FDs, which could be helpful to save more money if you are looking for some last-minute options to reduce income tax burden.
HDFC Bank Tax-Saving FDs: Here’s How To Open
According to HDFC Bank, if you already have a bank account, you can open a fixed deposit by going to the closest branch or using your NetBanking account. Here’s how to open a fixed deposit account if you already have an account with HDFC Bank.
Step 1: Go to your NetBanking account.
Step 2: Select Open Fixed Deposits under the Transact section.
Step 3: Choose the branch, enter the tenure and amount, designate a nominee, click continue and then confirm. Following this, you can easily download the fixed deposit advice, which serves as a receipt for your deposit.
How To Open A Fixed Deposit At Any HDFC Bank Branch
If you have an HDFC Bank account and want to open an FD at your nearest branch, download the FD application form before visiting the bank. Enter all required details in the form and carry the photocopies of the KYC documents. You may also need to carry the original documents to the branch for KYC verification.
The HDFC Bank offers up to 7.75% interest rate on its tax-saving FDs. It’s important to note that the tax-saving FDs generally come with a lock-in period of 5 years.
The investors can claim the tax benefits under the Rs 1.5 lakh Section 80C limit of the Income Tax Act for the investment in tax-saving FDs.
However, the interest earned on FDs will be taxable. On the other hand, senior citizens can claim benefits for an additional Rs 50,000 under Section 80TTB of I-T Act on the interest received on FDs.
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