80c- 5 year term deposit with co-operative banks

1 . Only Individuals and HUFs can invest in tax saving fixed deposit(FD) scheme. 

2. The FD can be placed with a minimum amount which varies from bank to bank, but maximum deductible u/s. 80C is 1.50 lakhs. 

3. These deposits have a lock-in period of 5 years. Premature withdrawals and loan against these FD's are not allowed. 

4. A person can invest in these FD's through any public or private sector Scheduled bank 

5 . One can hold these FD's either in 'Single' or 'Joint' mode of holding. In the case the mode of holding is joint, the tax benefit is available only to the first holder. 

6. The interest earned is taxable as per the investor's tax bracket and therefore, TDS is applicable. The interest on deposits is payable on either monthly/quarterly basis or can be reinvested. A person can avoid TDS deduction on the interest earned by submitting Form 15G/15H

7. Nomination facility is available for these FDs. 

8. Most banks offer slightly higher interest rates on FDs to senior citizens.

Hi Sir, 

Thanks for the detailed explanation.

I have small doubt about 5 Years of FD against whether we can claim Exemption by only 1st year U/s 80C? or we can claim exemption by all 5 years ( FD Period)?

regards,

Naresh

Deduction u/s. 80C of IT act, can be claimed in the year of investment only. (i.e. only for ONE/First year)