The Time Deposit Accounts in banks, also called Fixed Deposit or Term Deposit accounts. These accounts offer the facility of investing surplus funds and savings to mature on a predetermined date with relatively higher rates of interest without loosing liquidity and safety of funds. The interest rates under the scheme depend upon the period of investment and also vary from Bank to Bank. The accounts offer facility of interest withdrawal at periodical intervals or to get it on maturity along with the principal.
The deposits in these accounts are considered risk free investments. These accounts offer the facility of loan against the deposits and can also be closed prematurely (with some interest penalty).
The requirements for opening of accounts by trusts, societies, partnership firms and companies are the same as mentioned under Current Accounts.
Usually Term Deposit / Fixed Deposit Accounts are maintained by banks for Saving Bank / Current Account holders only.
Usually deposits for longer periods attract higher interest rates.
The Interest Rate varies from bank to bank.
Interest can be received at monthly (discounted rate) or quarterly rests or the interest can be reinvested to be received with the principal on maturity.
In case of reinvestment of interest, it is compounded at quarterly rests.
Finotax.com does not make any claim that the information provided on its pages is correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.
The visitors may visit the web site of Income Tax Department for resolving their doubts or for clarifications.