Fixed Deposits
Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilised are governed by the Companies Act under Section 58A. These deposits are unsecured.
Benefits of investing in Company Fixed Deposits
- High interest.
- Short-term deposits.
- No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year
Why is interest from Company Fixed Deposit higher than Banks?
Company Fixed Deposits have always offered interest which is 2-3% higher than Bank Deposit rate, because they have to pay higher interest to banks for borrowing money.
How are interest payments made?
Interest is paid on monthly/quarterly/half yearly/yearly basis or on maturity, and is sent either through cheque or through Electronic Clearing System basis.
When is TDS deducted on the interest from Company Fixed Deposits?
TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year. However, you can provide the company with the Form 15H/G if you are eligible to not pay any taxes for the relevant Financial year.
