Fixed deposits are popular for stable returns and their tax-saving benefits. As per the interim budget 2024, there has been no change in the tax deduction limit under sec. 80C of the ITA, and investors can continue to enjoy tax benefits of up to INR 1.5 lakhs on their tax saver FDs. Moreover, the recent changes in debt fund taxation will make FDs a more attractive option for various investors in terms of tax savings.

With their promise of guaranteed and steady returns that can be calculated using IndusInd Bank FD Calculator, fixed deposits (FD) offer an attractive investment avenue to investors of varying risk profiles. Tax Saver FDs also provide an opportunity for tax savings, as the principal amount on a tax-saving fixed deposit with a lock-in period of five years is exempt from taxation.

However, FDs may become more attractive to investors with the new debt mutual fund taxation rules that allow debt funds to be taxed in the same manner as fixed deposit accounts. This article will discuss the recent changes in various tax rules that can affect fixed deposits.

Tax Rules in the Interim Budget 2024

Before the interim budget 2024, the market had expectations for a change in the section 80C tax deduction limit. However, in the Budget 2024 speech, Finance Minister Nirmala Sitharaman announced that the tax deduction limit under section 80C of the Income Tax Act will remain unchanged.

In the fiscal year 2024-25, individuals can claim tax deductions of up to INR 1.5 lakhs on investments under section 80C.

Under section 80C of the Income Tax Act, investments in Employees’ Provident Fund (EPF), Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), and 5-year tax-savings fixed deposits are exempt from taxes up to INR 1.5 lakhs in a financial year.

Meanwhile, according to the existing tax rules under section 194A of the ITA, TDS applies to the FD interest earned. This TDS is applicable at 10% if the interest income exceeds INR 40,000 in a financial year and at 20% if PAN card details are not provided.

New Tax Rules for Debt Funds

Until 2022, taxes were applicable on mutual fund investments based on the investment period. Long-term debt funds held for 3+ years were eligible for LTCG tax at 20% with indexation benefits and 10% without. Short-term debt fund investments held for less than three years are short-term tax gains, subject to tax as per the individual’s tax slab.

However, after April 1, 2023, debt mutual funds no longer carry long-term capital gains and indexation benefits. The gains from debt funds, irrespective of their holding period, are now treated as short-term capital gains and subject to tax at the individual’s existing tax slab.

Effect of New Debt Fund Tax Rule on Fixed Deposit Investments

The new tax rule will bring fixed deposits on a par with debt mutual funds as the returns on debt funds are now taxed based on the individual’s tax slab, the same as fixed deposits. Besides, the removal of tax benefits from long-term capital gains on debt mutual funds will reduce their tax attractiveness to investors, as compared to fixed deposits.

Investors with debt fund investments, particularly those in the higher tax bracket, now face higher taxation on their gains than fixed deposits that carry tax deduction benefits under section 80C of the IT Act.

The tax-saving advantages and attractive fixed deposit interest rates offered by various banks could lead to a shift away from debt funds and towards FDs and other tax-saving investments.

Enjoy Attractive Fixed Deposit Interest Rates at IndusInd Bank

With indexation and LTCG taxation benefits no longer in the picture, debt funds are now on par with fixed deposits. With their ability to offer stability and assured returns with fixed interest rates, FDs can help investors keep their funds safe and growing even in a volatile market.

IndusInd Bank offers its customers competitive benefits with a fixed deposit account

• 100% online application process
• Flexible FD tenures
• Higher interest rates
• Multiple options for interest payout
• Tax-saving FDs for 5 years
• Video KYC facility

Grow your funds steadily with an IndusInd Bank fixed deposit. Apply for an FD today.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.

Senior citizen fixed deposits interest rates are usually higher than regular fixed deposits to enable elderly investors to meet their unique financial needs and maintain their standard of living post retirement.

When managing your finances, fixed deposits emerge as a reliable investment option that offers stability and assured returns. Two main fixed deposit categories cater to various age groups: Senior Citizen Fixed Deposits and Regular Fixed Deposits. It is essential to be aware of the differences in their interest rates to make wise decisions about your finances. Senior citizen fixed deposits typically offer a higher interest rate than regular fixed deposits. This variation can be attributed to senior citizens’ unique financial needs and situations, and helps to support them in maintaining their quality of life after retirement.

Let us examine the unique characteristics that set these two fixed deposits apart to make informed decisions towards financial stability.

Benefits of Fixed Deposits Scheme for Senior Citizens

Here are some of the key advantages of fixed deposits for senior citizens:

1. Higher Interest Rates

Fixed deposit schemes tailored for senior citizens offer higher interest rates than other fixed deposit options. This is because senior citizens tend to be low-risk investors since they are risk-averse and are committed to maintaining the deposit until maturity.

2. Low Risk and Guaranteed Returns

Investing in fixed deposits is a safe option for senior citizens seeking stable earnings which can be calculated using IndusInd Bank FD Calculator. The stability of fixed deposit returns remains unaffected by market fluctuations, which makes them more appealing to older individuals.

3. Flexible Tenure

Fixed deposits offer flexibility in terms of tenure, ranging from 7 days to 10 years. It enables senior citizens to align their investment plans with their financial needs and goals.

4. Interest Benefits

Senior citizens can select the frequency of interest payments from their fixed deposits, such as monthly, quarterly or upon maturity.

5. Encourage Savings

Banks play a pivotal role in promoting responsible saving through fixed deposits. By offering higher fixed deposit rates to senior citizens, they help older individuals make the most of their investments.

6. Loan against FDs

Having a fixed deposit is akin to having a safety net for unexpected financial challenges. In times of need, senior citizens can leverage their fixed deposit to secure a loan. Banks may extend loans of up to 90% of the deposited amount.

Apply for a Senior Citizen Fixed Deposit Scheme with IndusInd Bank

With its Senior Citizen Fixed Deposit Scheme, IndusInd Bank provides older individuals looking for safe and reliable investment options with a customised financial solution. Some of the compelling features and benefits of this scheme include:

• Minimum initial deposit of INR 10,000
• Flexible deposit tenures ranging from 7 days to 120 months
• The interest rate is usually 0.50% higher than regular fixed deposits
• TDS is deducted from the interest earned as per applicable tax laws
• Customers can nominate a beneficiary for the account
• Premature closure of a fixed deposit is permitted

Take the first step towards financial security and a worry-free retirement. Apply for the Senior Citizen Fixed Deposit Scheme with IndusInd Bank today!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.

A loan against a fixed deposit allows borrowers to leverage the value of their FD and secure a loan against it without liquidating it prematurely. It offers an assortment of benefits like lower interest rates, higher loan amount, zero processing charges, flexible repayment terms, and continued interest-earning on the FD.

Fixed deposits are a popular investment instrument among investors looking to grow their wealth securely. Unaffected by market volatility and offering guaranteed returns, these accounts make for a safe investment with higher returns than a standard savings account. You can calculate these returns using IndusInd Bank FD Calaculator.

However, fixed deposit accounts offer more than just attractive returns and a steady trajectory of wealth creation. If you are seeking a loan but have a low credit score or do not possess an asset to pledge as collateral, you can obtain credit against your fixed deposit.

A loan against fixed deposit empowers individuals to borrow funds against their FD without liquidating it prematurely. If you have a fixed deposit, here are 5 major benefits you can enjoy when you secure a loan against it.

5 Benefits of a Loan Against FD

1. Lower Interest Rates

One of the most significant benefits of a loan against a fixed deposit is the lower interest rates compared to other forms of loans. Being a secured loan, the interest rate on a loan against FD is typically just 2% to 3% higher than the fixed deposit interest rate. This means if you earn an interest of 8% on your fixed deposit, you will have to pay an interest of 10% to 11% on the loan against FD. This allows you to recover a significant portion of the interest payment through the interest earned on the fixed deposit.

2. Higher Loan Amount

With a loan against a fixed deposit, individuals can typically borrow up to 90% of the total value of their fixed deposit. For example, if you have an FD of INR 10 lakhs, you can secure a loan of up to INR 9 lakhs against it. This allows you to leverage a significant portion of your fixed deposit’s value without having to liquidate the entire amount. 

3. Zero Processing Fee

Unlike other loan products that typically come with a processing fee, a loan against a fixed deposit offers relief to borrowers by foregoing a processing fee. This enables you to secure the required funds without the added burden of processing charges, making it more cost-effective.

4. Flexible Repayment

When availing of a loan against a fixed deposit, you can avail of a repayment tenure as long as the duration of the fixed deposit. However, it is important to note that while the duration of the loan can be shorter than the FD tenure, it cannot exceed it. For example, if the fixed deposit term is 5 years, the loan term can be less than or equal to 5 years, but not longer.

5. Keep Your FD Investment Intact

Another major advantage of a loan against a fixed deposit is that borrowers can secure the funds without prematurely breaking their fixed deposits. The fixed deposit account continues to earn interest, ensuring you can benefit from its returns while accessing the required funds for meeting immediate needs.

Invest Your Funds Securely with IndusInd Bank’s Fixed Deposit

Fixed deposits offer a convenient way to grow your wealth without the risk of market volatility. They also make for an excellent asset during times of financial emergencies. By opening a fixed deposit account with IndusInd Bank, you enjoy a wealth of benefits such as:

• Hassle-free instant booking: Book your fixed deposit online in just 3 simple steps using just your Aadhaar and PAN card details.
• High interest rate: Enjoy the most competitive fixed deposit interest rates in the market.
• Auto-renewal: Set up auto-renewal to continue enjoying the benefits of your IndusInd Bank fixed deposit.
• Multiple interest payment options: You can choose to receive interest payments monthly, quarterly or at maturity.
• Video KYC: Open your FD instantly with a video KYC facility.
• Tax saver FD: Book an FD for 5 years to enjoy tax benefits.

So, the next time you are seeking a loan, consider the untapped potential of your investment and explore the benefits of a loan against fixed deposit.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.