5 points to check in an FD Receipt
With interest rates ruling high, bank deposits have emerged as an attractive investment option for many.
Here are five important factors you should check in your fixed deposit receipt:
1) Rate of interest and term
It may be appear to be a very basic thing for a fixed deposit investor, but it is better to double check if the rate and term mentioned in the receipt are correct, especially when you are renewing the old fixed deposit.
Sometimes, banks discontinue old schemes and the rate of interest also changes. If you have opted to receive interest at regular intervals, say quarterly, do check if it is mentioned in the receipt. If not, it is better to check again with banker.
2) Dates of maturity, auto renewal
The date of maturity is mentioned on the receipt. If you are planning for a particular need, say gifting a sum to your daughter on her birthday, it is better double check the date of maturity. If you have opted for auto renewal of a fixed deposit, check if it is mentioned in the receipt.
3) Prepayment penalty
If there is any penalty, it should be mentioned in the receipt. When a bank says it charges 1% as prepayment penalty, it means it will pay 1% less than the applicable rate of interest for the term the deposit has run. For example, if you made a fixed deposit for a year at 9%, but withdrew it after six months and if the bank offers 7% for a six-month FD, then you will be paid a rate of interest of 6%.
Please check if the receipt also acknowledges that you have made a nomination. A simple form can help you register your nomination for the fixed deposit. In case of the unfortunate death of a deposit holder, the nominee is paid the FD proceeds.
5) Declaration to save TDS
Banks deduct tax at source if the interest income exceeds 10,000. If your income falls in the 'no income tax bracket', you can submit declaration in form 15G or form 15H, as applicable. But do ensure that the same is recorded in the banker's records. Some banks make specific mention of such submissions on the bank fixed deposit receipts.
(Updated - 18 Feb 2012)
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