Tax deduction on short-term fixed deposits

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VIVEK

TRADER

27 Points Posted on 28 July 2011

Hi there,

I understand that Fixed Deposits qualify for Income Tax deduction u/s 80C.

I was wondering if there is any lock-in period for FD to claim deduction.

I mean, can I buy a FD in the month of February 2012 for 1 lakh for THREE months i.e., the maturity will be in the next financial year i.e., April 2012.

This way I can save upto 20% u/s 80C as I come under 20% bracket.

Will the Income Tax officer allow it.

Awaiting for the reply.

Replies (3)

VIJAY KUMAR B

Articles

35 Points Posted on 28 July 2011

yes there is no Lock in period for deposits made it is just that the savings should be made in the f.yr and limit is upto Rs.1 lac

Snehal

Learning Tax

93 Points Posted on 28 July 2011

The tenure of Fixed Deposits qualifying for Income Tax deduction u/s 80C is 5 Years and you cannot withdraw the same before due date and if withdrawn it will be added to your income in the F.Y when you withdraw the same.

Any FD for 5 years will not do ask the Bank for FD qualifying for dedeuction u/s 80C.

For Short Term tenure investment loook for ELSS. i.e 3 years

Ritu Sedwal

Chartered Accountant

222 Points Posted on 29 July 2011

Originally posted by : Snehal.Mahajan
	The tenure of Fixed Deposits qualifying for Income Tax deduction u/s 80C is 5 Years and you cannot withdraw the same before due date and if withdrawn it will be added to your income in the F.Y when you withdraw the same. Any FD for 5 years will not do ask the Bank for FD qualifying for dedeuction u/s 80C. For Short Term tenure investment loook for ELSS. i.e 3 years