Should I Invest In Tax Saver Fixed Deposit For 2015-16?

There are various financial investment options that provide you with beneficial returns. However, there is a factor of tax payment, which is liable for most of these investment options. This makes it nearly impossible to invest without losing most of your funds over the tenure period in the payment of taxes. However, in today’s financial times, the Tax Saving FD makes for an excellent investment option. As compared to the other financial options, this FD, especially the tax saver fixed deposit, proves to be a low risk option. While the rate of interest differs from bank to bank, they prove to be a beneficial option when it comes to the return on investment. So why should you invest in this deposit account today? We give you the reasons why.

Fixed Interest Rate

When it comes to the interest rates on the tax saver fixed deposit, it is normally calculate on a quarterly basis. This interest is then reinvested into the Tax Saving FD. After every quarter, the principle amount increases, by the value that is earned as the interest in the last quarter. If you calculate your interest rate on a monthly basis, the rate of interest offered on such a deposit will be considerably lower as compared to that calculated on a quarterly basis. With the interest rate in between 8.50 % to 9.50% this makes for an excellent investment.

Tax Benefits

Certain Tax Saving FDis popular instruments for saving on taxes. Investing in this tax saver fixed deposit will give you a benefit of a tax break especially when you invest a sum of money in the deposit. The money that is normally invested in the fixed deposit is locked-in for at least a minimum of 5 years in order to qualify for tax deduction. Additionally, premature withdrawal is not allowed. If the mentioned deposit is encashed before maturity, the amounts held under this scheme do not qualify for deductions.The maximum amount for the financial year of 2015 to 2016 is Rs.1.5 lakhs.

Long Term Planning

Investing your funds for long term planning has a lot of benefits. You can save a small amount of your funds invest it for any future financial project with the right strategy. Through this way, you can get more finances than you have invested at the time of maturity. You can calculate the current interest rates of the taxing saving fixed deposit while investing a fixed amount for a fixed tenure. Through this way, you will get you the ideal returns you want at the end of the tenure. During the course of the tenure, you will also be not liable to pay taxes, thus helping you save a lot of your funds.

Neha Sharma is a finance student who loves to write in her free time. She has considerable experience about the tax saving FD. Through her work, she has provided different reasons why you should invest in this tax saver fixed deposit to get the most out of your investment.