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Fixed Income

Introduction:

The Fixed income market also known as the debt market or the bond market is the largest of all the financial market in the world. Fixed income instruments promise a payment of steady interest income throughout the life of the deposit tenure and return of principal on maturity.
Fixed income instruments are classified on the basis of varying tenure. For Example:

Money Market Instruments - Up to 1 Year.
Short Term Deposits - Up to 5 Years.
Medium Term Deposits - Up to 10 Years.
Long Term Deposits - More than 10 Years.

Fixed Deposits

Fixed deposit is a form of financial instrument provided either by Banks, Post offices or NBFC’s (Non Banking Financial Institutions) and few corporate. These are also known as Term Deposits or Time Deposits. These types of deposits have maturities generally ranging from 7 days to few years, and fall into the category of short term deposits.

Term Deposits are generally safer when compared to other forms of investments offering regular interest income. This interest income is either paid to you upfront at regular intervals or is reinvested back and paid to you on maturity along with the principal. The guaranteed return is what makes the Term Deposit most popular among investors.

Benefits of Fixed Deposits

Fixed deposits offer higher rate of interest when compared to a savings account.
Fixed deposits are comparatively safer when compared to other forms of investments.
The lowest term of a fixed deposit is of 7 days.
Loans are provided up to 80% to 90% value of your fixed deposit.
Deposit can be redeemed at any point during the tenure by paying a small penalty.

Taxability Interest income earned from fixed deposit is taxable, if it exceeds rupees 10,000.00/- in a financial year. This is applicable to interest paid or reinvested, per PAN card. The financial institutions deduct tax at source known as TDS at 10% of the interest earned.

However, the tax applicable on the interest income earned is not 10%. It is rather taxed as per your individual tax slab.

If your overall income in a financial year does not exceed the overall tax limits you can submit a Form 15 G (If you are below 60 years of age) or Form 15 H (If you are above 60 years of age) to the Bank to avoid paying TDS.

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To invest in various kinds of Fixed deposits, Corporate deposits and Government bonds. Give us a Call to know more.

Fixed Income

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