Investors prefer to invest in tax-saving FDs as they allow them to claim a tax deduction of up to Rs. 1,50,000 per year as per Section 80C of the Income Tax Act, 1961. Tax-saving FDs come with a tenor of 5 years. The longer tenor usually becomes a concern for the individuals who don’t want to lock-in their deposits for too long. However, you might not have to wait for 5 years for your tax saving FD plans to mature as the banks are planning to reduce their tenor to 3 years.
The decision of the banks to reduce the tax-saving FD tenor to 3 years will enable you to avail the tax benefits even with a shorter tenor. Earlier, only ELSS (Equity Linked Savings Scheme) gave the option of saving taxes of up to Rs. 1,50,000 with a 3-year tenor. ELSS usually generates a higher income but as it is a mutual funds scheme, it also comes with its set of risks. Therefore, if you are looking for a tax-saving scheme that is stable and offers the option of shorter tenor, tax-saving FDs can be an ideal investment for you.
The FD interest rate offered by tax-saving FD schemes varies from bank to bank. As the bank FD rates today are low, your deposits won’t be able to fetch higher returns. Instead, you can invest in company FDs like Bajaj Finance FD and reap high interest income along with many other features. The reasons that make Bajaj Finance FD an ideal investment option are given below:
With Bajaj Finance Fixed Deposit, you get a flexible tenor range from 12 to 60 months. Therefore, unlike tax-saving FDs, you don’t have to stick to a single option when it comes to choosing a lock-in period for your deposits.
Bajaj Finance FD also allows you to invest in multiple FD plans using the same paycheque. The multi-deposit facility enables you to pick a different tenor and FD type for each of your deposits. This enables you to ladder your deposits for enjoying a higher liquidity. Also, by investing in multiple FDs, you will have the alternative to reinvest the returns at a higher interest rate in the future.
Withdrawing Deposits Early
With tax-saving FDs, you cannot withdraw the deposits till they mature. The same rule applies for the 3-year ELSS as well. However, if you have invested in Bajaj Finance FD, the deposits can be withdrawn prematurely. The only condition is that the deposits must complete the minimum lock-in period of 3 months. Moreover, Bajaj Finance also offers a collateral-free loan to their depositors and helps them to keep the investment growing consistently.
Bajaj Finance FD assures higher returns than any other bank FD schemes. Suppose that you deposit Rs. 50,00,000 in a bank FD for 5 years. At the most, your deposit will grow at an interest rate of 5.5%. The returns offered by bank FDs and Bajaj Finance FD for the same deposit amount and tenor is given below:
|FD Plan||Amount||Interest Rate||Tenor||Interest||Maturity Amount||Growth in deposits|
|Bajaj Finance FD||Rs. 50,00,000||7.05%||5 years||Rs. 20,29,159||Rs. 70,29,159||40.58%|
|Bank FD||Rs. 50,00,000||5.5%||5 years||Rs. 15,70,333||Rs. 65,70,333||31.40%|
You get assured returns after investing in Bajaj Finance FD as it has been bestowed with the best credit ratings by top credit rating agencies such as CRISIL and ICRA.