5 smart things to know about tax saving fixed deposit
1. Individuals and HUFs are eligible to open a tax saving fixed deposit account and claim tax deduction up to Rs 1.5 lakh in a financial year for the amount invested.
2. Such deposits are only available for 5-year tenures and can be opened with any bank, except cooperative and rural banks.
3. The interest earned is taxable at the marginal rate applicable to the tax holder, while the maturity proceeds are tax-exempt.
4. Tax-saving deposits are locked for the 5-year period and not available for premature encashment or pledging for a loan.
5. The deposits can also be opened jointly. In such cases, the tax benefit is available only to the first account holder.
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