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IDFC First Bank Tax Saving Fixed Deposit

Updated 30 Aug 2023

Navigating the financial landscape can be daunting, especially when looking for secure avenues to save on taxes. IDFC Bank presents a solution with its Tax-Saving Fixed Deposits, an ideal blend of wealth appreciation and tax benefits. While ensuring your capital's growth, these FDs also allow you to enjoy deductions under the Income Tax Act.

 

This blog delves deep into IDFC's Tax-Saving FDs, highlighting their features, benefits, and why they might be the perfect addition to your financial portfolio. Join us as we unpack the nuances of this financial instrument, simplifying tax-saving for you.

Features of the Tax-Saving FDs in IDFC Bank

  • Tax Benefits: These FDs are eligible for tax deductions per Section 80C of the Income Tax Act.
  • Duration: Tax Saving FDs usually come with a 5-year lock-in period, prohibiting any withdrawals during this time.
  • Interest Offerings: Competitive interest rates are a highlight, and institutions like IDFC often provide an additional rate increment for senior citizens.
  • Borrowing against FD: Given their fixed tenure, these FDs typically can't be used as loan collateral.
  • Interest Disbursement: Different payout options, such as monthly, quarterly, or annual intervals, might be available. Some banks also provide reinvestment of the earned interest.
  • Renewal Policy: Unless instructed otherwise, these FDs can be automatically renewed upon maturity for an equivalent period at the current interest rate.
  • Early Withdrawal Charges: Withdrawals before the end of the lock-in period aren't permissible. Withdrawing after the lock-in but before FD maturity might invite penalties.
  • Investment Limits: While there's a minimum deposit requirement to start a tax-saving FD, the upper limit typically remains INR 1.5 lakh annually, aligning with the 80C guidelines.
  • Tax Deduction at Source (TDS): TDS might be deducted if the interest income surpasses a specified limit.

Eligibility Criteria

Both individuals and Hindu Undivided Families (HUFs) are qualified to invest in these tax-saving FD schemes.

For the purpose of tax savings, one can opt for fixed deposits in either public or private sector banks. However, cooperative and rural banks don't qualify.

A 5-year term deposit in a post office is also recognized as a tax-saving instrument.

Deposits can be made individually or as a joint account. However, only the first account holder is entitled to the associated tax advantages.

Documents Required

Proof of Identity

  • PAN Card
  • Aadhaar Card
  • Passport
  • Voter ID Card
  • Driving License
  • Government ID Card (for government employees)
  • Photo ID issued by a recognized educational institution


Address Proof

  • Utility Bills (Electricity, Water, Gas) not older than 3 months
  • Property tax bill
  • Rent agreement (for rented premises)
  • Photographs: Recent passport-sized photographs.

FAQs

What is the tenure of IDFC's Tax Saving FD?

The tenure for IDFC's Tax Saving FD is typically 5 years.

Is there a lock-in period for the tax-saving FD?

Yes, a mandatory lock-in period of 5 years, during which premature withdrawals aren't allowed.

How much can I invest in a tax-saving FD with IDFC Bank?

While there's usually a minimum amount required to open a tax-saving FD, the maximum amount qualifying for tax benefits under Section 80C is capped at INR 1.5 lakh per annum.

Do senior citizens get a higher interest rate?

Banks, including IDFC, often pay senior citizens a higher interest rate than regular depositors. It's advisable to check with the bank for the current rates.

Can I take a loan against my tax-saving FD with IDFC Bank?

No, due to the lock-in nature of the tax-saving FD, IDFC Bank doesn't offer loans against them.

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Disclaimer: Wint Wealth makes no guarantee or warranty on the accuracy of the data provided on this site, the information displayed is subject to change and are provided on an as-is basis. Nothing contained herein is intended to or shall be deemed to be investment advice, implied or otherwise. You are advised to make your own enquiries, consult a professional advisor and verify the information prior to taking any investment decisions. We accept no liability for any loss arising from the use of information contained on this website.

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