Fixed Deposit (FD) - Open Fixed Deposit Account at Best Interest Rate (2024)

If you open Fixed Deposit without a PAN Card, these are the following implications for customers:

1. TDS will be recovered at 20% (as against 10%).

2. NO TDS credit from the Income Tax department.

3. NO TDS certificate will be issued (As per CBDT circular no: 03/11).

4. Form 15G/H and other exemption certificates will be invalid and penal TDS will apply

As per Section 194A of Income Tax Act 1961, TDS shall be deducted at the rate of 10% when interest payable or reinvested on FD & RD per customer, across all Branches, is likely to exceed Rs. 40,000/- (or Rs. 50,000/- for Senior Citizens) in a Financial Year, unless otherwise exempt under law.

In case the deposit holder does not want the Tax to be deducted at source, they may submit Form15G / 15H (other than company, firm or co-operative society)/ Exemption Certificate under Section 197 (in case of all holders)/ or any other Tax Exemption Certificate with the Bank. Such form or tax exemption certificate has to be submitted every financial year for each fixed / recurring deposit held and on each renewal of the deposit.

As per Section 139AA of the Income tax Act, 1961, it is mandatory to link Permanent Account Number (‘PAN’) with Aadhaar by June 30, 2023. If PAN is not linked, then the PAN provided by the customer will become inoperative. Failure to link will also attract higher TDS rate of 20%, as may be applicable on the income from the Bank. Bank will be unable to refund the TDS once deducted.

The Sweep-In facility enables customers to link existing Term Deposit to Savings or Current Accounts held with the bank. In case of an emergency, the shortfall in the account is swept in from the linked Term Deposit in the units of Rs. 1/-, thereby giving customers the convenience of getting payments processed with ease.

Let's take an example to illustrate how the Sweep-In facility works: Mr. Ramesh has availed Sweep-In facility on his existing Term Deposit of ₹50,000/- held with the bank. Let’s assume that on a particular day, the balance in his Savings Account is ₹30,000/-, and he issues a cheque for ₹50,000/- in his account and it has now come for clearing. In this instance the shortfall of ₹20,000 (Account Balance – Obligation Amount issued as a cheque), will be utilized from the linkedFD accountto clear the cheque.

One of the many Fixed Deposit tax benefits is that the Bank can deduct TDS on the FDs booked. The entity would need to submit either Form 15G OR Certificate of Tax exemption issued under Section 197 of Income Tax Act, 1961. However, PAN would be mandatory. In absence of PAN, Form 15G and other exemption certificates would be invalid & penal TDS would be applicable.

As per Section 139AA of the Income tax Act, 1961, it is mandatory to link Permanent Account Number (‘PAN’) with Aadhaar by June 30, 2023. If PAN is not linked, then the PAN provided by the customer will become inoperative. Failure to link will also attract higher TDS rate of 20%, as may be applicable on the income from the Bank. Bank will be unable to refund the TDS once deducted.

The interest rates applicable on Fixed Deposits withdrawn before the maturity date, as stated by the RBI, shall be as under:

1. Interest shall be paid at the rate applicable to the amount and period for which the deposit remained with the bank and not at the contracted rate.

2. No interest shall be paid, where premature withdrawal of deposits take place before completion of the minimum period specified i.e. 7 days.

Look for the following features in an FD account:

1. Online fixed deposit accounts offer more convenience and flexibility. You can open IDFC FIRST Bank’s FD accounts directly through the IDFC FIRST Bank mobile banking app.

2. Interest rate is a vital criterion for FDs. Choose a high FD interest rate to grow your savings faster.

3. Ensure the FD you choose has flexible tenure options. Select an appropriate FD tenure after analysing your financial requirements well.

4. Read the terms for premature withdrawal and the penalty to be paid in such a case, if applicable.

5. An overdraft facility is essential in FDs. Unsecured loans are generally more expensive in terms of repayment than loans against FDs.

If you have a current or savings account with us, here is the two-step process to open an FD account online with IDFC FIRST Bank:

1.On the IDFC FIRST Bank mobile banking app, go to ‘Deposits’ and click on “Create FD”

2. Select deposit amount of your FD, the tenure and click on “Create FD” to complete the process

Alternatively, you can also open an FD by visiting your nearest IDFC FIRST Bank branch.

1. Easily accessible online through IDFC’s mobile app

2. High interest rate

3. Interest payout options

4. Special benefits for senior citizens

5. Flexible tenures