Last day to file income tax returns (ITR) is July 31. If you missed out in last fiscal, this year you may invest in tax-saving fixed deposits (FD).
Fixed deposits or FDs, the fixed income instruments which are highly popular among customers, are of two types: regular FDs with the facility of premature withdrawal and tax-saving FDs which do not have the facility of premature withdrawal. Fixed deposits with premature withdrawal facility, however, do not offer income tax benefits. Tax-saving fixed deposits help you save on income tax outgo. However, tax-saving fixed deposits come with a lock-in period of five or 10 years. The deadline for filing income tax returns (ITR) for assessment year 2018-19 is round the corner (July 31).
If you did not make any tax-saving investments in the last fiscal, you should make some wise choices this year to invest your money in tax-saving schemes like fixed deposits for tenures of five or 10 years. These fixed deposits also offer attractive interest rates.
Consider this: a five-year tax-saving fixed deposit in State Bank of India (SBI) fetches you an interest rate of 6.75 per cent. As compared to this, a five-year fixed deposit with ICICI Bank offers an interest rate of 7 per cent.
(Fixed deposit interest rates mentioned above are for deposits below Rs 1 crore as mentioned on the banks' websites.)
Fixed deposits per se are a popular savings instrument. A fixed deposit can be created easily even online. Most banks offer this facility.