The Covid-19 pandemic disrupted global and national economic progress as a result of which individual households too suffered financial setbacks. If not job losses, then salary cuts became the norm in many of the private sector companies across the world.
In such a scenario, it becomes imperative to optimise your savings. In the backdrop of volatile stock markets, it's also important to be cautious with your investments.
With an array of investment and savings instruments to choose from, ranging from mutual funds to stocks and fixed deposits, which one should you choose to safeguard your hard-earned money while also making it grow, especially in unpredictable times like a pandemic.
The answer might surprise you in its simplicity - the best financial savings product to choose in a pandemic is the good old fixed deposit! Let's look at the reasons why.
As you can see, in times of volatility and uncertainty like the Covid-19 pandemic, traditional financial products like the fixed deposit have a value and appeal that helps to maintain your peace of mind that your money is safe while also ensuring that you continue to earn an attractive rate of interest on it.
This is a smart option whether you are below the age of 60 or a senior citizen, whether you are an individual or other eligible entity such as a Hindu Undivided Family (HUF), company, partnership, firm, club, association, etc.
According to the new rule of the Reserve Bank of India, if the amount is not claimed after the FD matures, then the fixed deposit will earn less interest.
In case the FD owner dies, then the second holder will get the FD amount. On death of the second holder of the FD, the nominee as mentioned in the standing instruction will earn the FD amount on maturity.
If the interest amount of FD is less than Rs.40,000 in a year, then no TDS is deducted. Interest amount above Rs.40.000 per annum will incur TDS at an applicable rate. The FD interest amount of Rs.50,000 is tax free for senior citizens above 60 years of age.
Yes, you can withdraw FD before the maturity period. But withdrawing before maturity or premature withdrawal will incur a penalty as per applicable rate depending upon the financial institution.
Yes, some FD schemes have lock-in periods of three or five years. If FD amount is withdrawn before the lock-in period, then penalty may be charged by the financial institution depending upon their policies.
Depositors have to submit duly filled and signed Form 15G and 15H to the financial institutions so that no tax is deducted if they fall under non-taxable income.
The fixed deposit interest amounts up to Rs.5000 is tax free. Any amount above this threshold limit will incur TDS as per the applicable rate.
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