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What is a fixed deposit ?

FD’s are one of the oldest and most common methods of investing. When it comes to assured returns, choosing the right type of savings scheme makes all the difference.

Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk.

Company Fixed Deposits

Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits.


Types of Companies offering Fixed Deposits

  • Financial Institutions
  • Non-Banking Finance Companies (NBFCs).
  • Manufacturing Companies
  • Housing Finance Companies
  • Government Companies & You can also go for Fixed Deposits with banks
Features and Benefits
  • Company Fixed Deposits offer comparatively higher returns than banks
  • Choose the best tenure for you from a wide range as per your convenience.
  • Company Fixed Deposits are non transferable that means there is no fear of FD receipt being stolen. In case it falls into wrong hands, it cannot be misused.
  • Premature encashment of deposit is available any time subject to payment of prescribed penalty.
  • Diversify Risk- The deposits should be spread over a large number of companies engaged in different industries. This way, you'll be able to diversify your risk among various industries/companies.
  • Wide Choices-many companies operating in the Company Deposit market. This will help you decide whether to renew or reshuffle the deposit.
  • Attractive rates as applicable from time to time.
  • You can choose how frequently you want to recieve your interest payment
  1. Maturity
  2. Yearly
  3. Half-yearly
  4. Quarterly
  5. Monthly

Infrastructure Bonds


Key Features :

New Section Introduced in Income Tax Act 2011: Section 80CCF was introduced in the Income Tax Act, 1961 in the budget of February 2010. As per this section investments made in notified infrastructure bonds are exempt from tax up to maximum of Rs 20,000 per year. Section 80CCF allows individuals to invest Rs. 20,000 in infrastructure bonds, and reduce this amount from taxable income. This exemption is in addition to the Rs. 100,000 deduction under section 80C (Investment in instruments like ELSS Mutual Funds, Life Insurance, Provident Fund etc).

Interest Income is Taxable: The interest income from infrastructure bond is taxable. The interest will be added to investors taxable income. This means even though the investment in these bonds is exempt from tax (maximum Rs 20,000). interest income is not. This means investment under section 80CCF is advisable only after the investor has completely exhausted Rs One Lakh investment under section 80C.

The funds raised through these bonds will be utilised towards "infrastructure lending" as defined by the RBI in the regulations issued by it from time to time, after meeting the expenditures of, and related to the issue. These infrastructure bond issues are part of the government's effort to mobilise money to part-fund the massive $1-trillion infrastructure spend it has planned for the Twelfth Plan.

Tax Benefits: Under section 80CCF of the Income Tax Act, Rs 20,000 per annum paid or deposited as subscription to long term infrastructure bonds shall be deducted in computing the taxable income. This is over and above Rs 1,00,000 tax benefit available under section 80C, 80CCC and 80CCD.

Pros: The limit of Rs 20,000 per annum is in addition to Sections 80C, 80CCC and 80CCD. Hence, it is advisable to consider applying in this issue. Cons: The bonds are locked in for five years, so there is no exit in case you need the money midway which restricts liquidity.
 
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