Fixed deposits (FDs), which offer guaranteed returns on investments, are meant for investors looking for assured interests.
FDs are fixed-income instruments, the returns on which are determined at the time of initiating the deposit. The annual returns on fixed deposit investments are fixed even amid market fluctuations and geopolitical uncertainties. Fixed deposits are of two types: with premature withdrawal facility and without premature without facility. The fixed deposits which offer premature withdrawal facility do not offer income tax benefits. However, FDs without a premature withdrawal facility require a lock-in period of five or 10 years and offer income tax benefits.