How to get a duplicate PAN card if your have lost your PAN card

Steps to get a Duplicate PAN card

• Visit the NSDL website.
• Fill the online PAN replacement form and click on submit.
• Ensure that all entry fields are correct, else you will not be able to submit the application.
• If you need to make changes to your PAN card, fill in the corresponding box with the required changes.
• Fill in your PAN details and address for contact.
• For a new request, your Aadhaar card will detail will have to be submitted along with your application.
• Currently, the price for a replacement of PAN card application is Rs.107 (inclusive of taxes). You can make the payment through your net banking account or with your credit or debit card.
• The fee for the process to replace a PAN card is Rs.997 currently. This too can be made via your net banking account, a demand draft or through your credit or debit card.
• If you are making a payment through Demand Draft, the name of the applicant should be on the DD.
• On making the entry, the acknowledgment will be displayed.

The acknowledgment will consist of:

• A 15-digit unique Acknowledgment number
• Details of Proof of Identity, Address & Date of birth(applicable for Individual & HUF applicants)
• Category of applicant
• Aadhaar No.
• Permanent Account Number (PAN)
• Name of applicant
• Father’s Name (in case of ‘Individual’)
• Date of Birth/Incorporation/Agreement/Partnership or Trust Deed/Formation of Body of Individuals/Association of Persons
• Address for Communication
• Space for Photograph (in case of ‘Individual’)
• Payment Details
• Space for Signature

When you have gotten the affirmation, you can check the status of the PAN confirmation. This ought to be done inside 5 days from accepting the affirmation. Take after the means said underneath to check PAN confirmation utilizing PAN number: 

Sign on NSDL PAN card money related administration site. 

For substitution or republish of PAN card, enter your current PAN card number. 

Enter the captcha. 

Tap on submit. 

The site will show the PAN check status.

Online application process for a copy PAN card Form 

Candidates should first tap on the connection titled 'Apply Online' and they will be diverted to another page. 

People should tap on 'Application sort' and select the third choice which is, 'Changes or Correction in existing PAN Date/Reprint of PAN Card (No progressions in existing PAN Data). 

Under 'Classification' candidates should pick the pertinent alternative, which is either individual or organization or so on. 

The following area is with respect to data of the candidate. The principal answer that should be given is the 'Title'. 

Next, they should give their last name or their surname. 

People should then give their first name and their center name. 

Next, people should specify their date of birth including month, year and date.

Top 5 Reward Credit Cards In India

Top Rewards Credit Cards  in India 2017

1.SimplySAVE Advantage SBI Card

This card comes stacked with benefits. Once the cardholder burns through Rs.2,000 in the initial 60 days, they get a reward of 2,000 reward focuses. Additionally, for each Rs.100 spent on feasting, staple, motion pictures, and departmental stores, the cardholder can gain 10x reward focuses. On each other use made on the card, they can gain 1 remunerate point for each Rs.100 spent on the card. Likewise, utilizing this card at any petroleum pump will get you opportunity from paying 1% fuel additional charge.

2.HDFC MoneyBack Credit Card

The cardholder earns 2 reward points on spending Rs.150 on this credit card. Also, they can earn 2x reward points while shopping online. Apart from this, the cardholder can bag a fuel surcharge waiver of up to Rs.500 on every billing cycle. This card also comes with zero liability if the cardholder ends up losing it.

3.American Express Membership Rewards Credit Card 

Easy to use and highly popular, this credit card is one of the most useful when it comes to gathering reward points. Cardholders can bag a welcome gift worth 4,000 bonus membership reward points. Also, they can earn 1 membership reward point for every Rs.50 spent on anything except for fuel, utilities, insurance, and cash transactions.

4.ICICI Instant Platinum Credit Card 

This card is for all those who love to have a good life. Cardholders can earn up to 2 reward points on every Rs.100 they spend on this card (except for expenditure on fuel). These reward points can be collected and redeemed for cash. Cardholders can also get a discount worth 15% on dining at more than 800 restaurants using the Culinary Treats Program.

5.Standard Chartered Platinum Rewards Credit Card 

This is another Mastercard that is profoundly mainstream among individuals who anticipate winning prize focuses. Cardholders can gain 5x remunerate focuses at presumed lodgings, eateries, and others in India and also, abroad. They can likewise acquire 1 remunerate point for each Rs.150 spent on each other classification. Cardholders can likewise sack 5x remunerates on purchasing fuel in India. 

On the off chance that picked admirably, a great prizes Visa can help the cardholder to win weighty rebates on shopping. All it needs is some fastidious picking. 

How to link PAN to Aadhaar

Citizens of India who have been allotted a 12-digit Aadhaar number will have to have it linked to their PAN. Those who are planning on applying for a PAN card will also have to quote their Aadhaar number when they do so. The Finance Act of 2017-18 has made Aadhaar a necessary requirement for the filing of tax returns provided that your PAN has been linked with your Aadhaar. Linking the two is expected to keep a tab on tax evasion. According to a notice by the government, those who fail to link their Aadhaar and PAN will have their PAN canceled.

It has been reported that over 2.07 crore taxpayers residing in India have already linked their Aadhaar and PAN card. Currently, there are over 115 crore people who have an Aadhaar card where as there are over 25 crore PAN card owners in the country.

PAN and Aadhaar should be compulsorily linked

The Government of India has declared that every Permanent Account Number (PAN) holder has to connect his or her number to their Aadhaar from July 1, 2017. You will soon have to start quoting your Aadhaar when you apply for PAN or while filing your income tax returns.

In Form 49A, a new section has been added to enter the Aadhaar number while one is applying for PAN. The Income-tax Rules of 1962 have been amended to declare that whoever has PAN must mandatorily quote his or her Aadhaar number to the income tax authorities.

PAN and recently even Aadhaar have been made compulsory for creation of bank accounts and making cash transactions.

 In the rush to link Aadhaar to PAN on the income tax website before 1st July 2017, people have observed that the website has been crashing. Most people seem to have understood that if they do not link their Aadhaar with PAN before 1 July, the PAN would be automatically disabled. But that is not entirely true.

As per the latest declaration from the government, the linking will be mandatory from 1 July, and not before it. After July 1st, the government would declare a date after which PAN cards not linked to Aadhaar will be invalidated.

Individuals applying for new PAN post July 1 would have to quote their Aadhaar numbers mandatorily. Quoting of Aadhaar is also mandated when filing income tax returns.

Login to the income tax e-filing website, https://incometaxindiaefiling.gov.in/ and access the ‘Profile Settings’ menu option. Click on ‘Link Aadhaar’. A form will be displayed in which you have to update your name, gender, date of birth, and Aadhaar details.

Submit the form to complete the process. You will receive a confirmation email at your registered email ID.

New to Credit Cards? Here’s All You Need to Know

So you’ve decided to take the plunge and get yourself a credit card. Unwrapping that shiny little piece of plastic opens you to a world of benefits and privileges. However, there are certain rules to live by if you want to avoid falling into a debt trap that could see your credit worthiness spiral downwards and make you a financial persona non grata.

A credit card gives you the freedom to spend money that is not debited from your bank account up to a certain sum for a fixed period of time. Thus, credit cards make credit available to you as and when you need it. The amount is to be repaid based on your billing cycle to avoid penalties and fines. While the initial rush of swiping your card everywhere you go might seem the way to go, here are some points to keep in mind so card debt does not loom on your financial horizon:

• Credit Card Charges:

A credit card usually comes with a whole list of Credit card charges, beginning with the joining fee. Additional charges include the annual fee, statement fees, service tax, surcharge, late payment fee, card replacement fee, etc. Exceeding your credit limit on your card will attract a charge as well. Delayed payment of your dues will also result in a penalty, which will be levied on your subsequent bill.

Not paying off the total amount due on your credit card will attract interest charges, which could be anywhere from 3%-4% a month. Doesn’t seem like much, you might scoff, but when annualised, the rate amounts to a whopping 48% on the higher end of the interest spectrum. This amount is also levied on each successive bill that has a balance carried over, which will inflate your overall amount due by a significant amount.

• Picking a Credit Card that Suits Your Needs:

Picking a credit card that suits your needs is important, as this could be the deal breaker between you enjoying the perks of a card and drowning in a sea of debt. If you’re looking for a card merely to help you keep up with payments and aren’t looking for any perks, a no-frills card is the best bet for you. Looking for discounts each time you swipe at a store? A shopping credit card that offers cashback or in-store rewards is the one for you. Frequent travellers can benefit from a travel card, which converts points into air miles redeemable on flights or hotel stays.

• Dates to Remember:

With your new credit card comes a host of important dates that you have to keep in mind, such as your bill payment date, the date the bill is generated etc. The date your bill is generated on marks the end of your billing cycle and lists your outstanding dues for that period only. The bill payment date is the date by which you are expected to pay off the outstanding amount or the minimum amount due to avoid late payment charges.

• Credit Card Application Status
  Different banks have different ways of credit card application status but most of them have an online facility, where you can apply for a credit card online as well. The process then involves furnishing all required documents and information to the bank. Once, the application process is complete, you must track your application status to check how far long has it been processed by the bank so that you can follow up with the bank accordingly. Usually, it takes up to three weeks to receive your credit card from most banks. Credit card may take a month from the date of registration, as it undergoes processing request, followed by dispatch to your home address.
  

• Minimum Due versus Full Payment:

Credit cards offer you the chance to pay off your debt in instalments, either before the due date or after it. It is always advisable to pay off your outstanding amount by the due date to keep your credit score and repayment history healthy. However, if you are unable to pay off the whole amount, you are required to pay a minimum amount, usually a percentage of your total outstanding amount.

Getting away with paying just the minimum amount brings with it a set of charges though, since you will be paying interest on the balance amount. You will also lose out on the interest-free period, meaning every successive transaction will incur interest from the day the purchase is charged to your card.

As seen above, there are quite a few pitfalls associated with credit cards that, if you aren’t careful to avoid, could leave you in debt for a considerable amount of time. Being prompt with payments, avoiding maxing out your credit card and being prudent with what you charge to your card will ensure that you reap the many benefits that come with credit cards.

Credit Card Bill Payment by Online Banking

To pay credit card bill by online banking follow the below steps

• Activate your online banking account which is secured with an IPIN.
• You can then login and view your credit card purchases, statements, payment dues dates and outstanding amounts.
• Select the credit card and click on “Pay credit card bill now”.
• You can then select the bank account to be used, enter the amount you wish to pay and make the payment.
• Online Banking is the fastest way to pay your bill as the turnaround time is usually immediately or on the same day.

SFBs Compete for Term Deposits as Interest Rates Fall

Banks across the country are flushed with currency since demonetization of two of the most popular currency notes – Rs.500 and Rs.1000 was announced by Prime Minister Narendra Modi on November 8, 2016. In lieu of this move, interest rates across deposits and banks have been falling ever since and SFBs or Small Finance Banks are competing with each other to offer the best possible rates on the table.

How are SFBs capitalizing on interest rates post demonetization?

The main reason for slashing the interest rates of deposits have been to keep in check with the offtake of slow credit as the aftermath of demonetization. Customers of SFBs are now being offered interest rates that are up to 200 bps or basis points higher than the current market rates. Take for instance, Suryoday Micro Finance – the bank is offering its term deposits at an interest rate of up to 9% p.a. depending on the tenure and senior citizens will receive an additional interest rate of 0.75% p.a. Even their savings accounts are being offered at an interest rate of 6.25% p.a. for up to Rs.1 lakh and for deposits between Rs.1 lakh and Rs.10 lakhs, an interest rate of 7.25% p.a. is being offered.

Utkarsh is another SFB that is offering their term deposits with interest rates of up to 8.5% p.a. and an additional interest rate of 0.50% p.a. for senior citizens. Utkarsh is also set to open 50 new bank branches over the span of 2 months and upgrade its present MFI or Micro-Finance Institutions into full-fledged banks this April, as communicated by the bank’s managing director, Govind Singh.

Ujjivan is another SFB that is prepared to offer interest rates on deposits that are higher than the prevailing market rates. Ujjivan’s focus so far has been only on wholesale deposits, but it is also preparing itself to raise interest rates for its retail deposits in the near future.

Equitas is offering interest rates up to 9% p.a. on their term deposits and between 6% p.a. and 7.5% p.a. on their savings account.

Capital Small Finance Bank is offering 4% p.a. interest rate on their savings account and 7% p.a. on their term deposits for a tenure between 5 years and 10 years. For senior citizens, the bank is offering an interest rate of 7.2% for a tenure of 400 days.

What does the future look like for SFBs?

The cost of funds for a majority of these Small Finance Banks have been 11% or more. However, as many SFBs are gearing themselves to convert their existing businesses into banks, their cost of funds will most definitely come down even if they are offering interest rates higher than the prevailing market rates.

However, most of the SFBs are said to initially focus on micro lending before transitioning into full-fledged retail banking. Due to this focus, most of the SFBs are proposing to keep their MCLR or Marginal Cost of Funds based Lending rate high.

According to the norms put forth by the RBI (Reserve Bank of India), SFBs have to start their operations latest by this April. RBI granted licenses to 10 SFBs in September 2015 and recently, 11 companies have been permitted to start payment banks.

Why Liquid Funds are a Good Idea

With the demonetisation drive that took the country by storm, liquidity has seen a tremendous increase and while the drive did stir up the pot, it managed to bring a lot of the currency back into the banks. The demonetized currency has almost entirely (close to 95%) been deposited back into the accounts and the overall financial ecosystem is currently seeing a great degree of liquidity.

This feature has consequences that reach farther than the lines at the ATM. Banks are now flush with cash which has caused them to reduce interest rates. Borrowers with car loans or home loans can enjoy this brief respite but investors’ better start looking at other options rather than traditional fixed deposits. Lowered interest rates also imply that the bank pays lower rates for deposit amounts thus reducing the returns.

The reduction in rates are meant to deter people from further depositing cash into the system. Investors can still opt for time tested methods of deposits that are extremely safe but give poor yields. Other options investors could consider are Liquid Funds.

Features of Liquid Funds

Liquid funds are money market funds that fall under the debt fund category. These funds give better returns than bank deposits and consist of investments such as short-term treasury bills, commercial papers, term deposits and certificate of deposits. The maturity period of assets invested in have an average period of 91 days

Liquid funds are offered by a wide range of fund houses. Entry or Exit loads are not imposed on these funds. Unlike equity funds, the management fees levied on liquid funds are lower as well ranging between 0.5% and 1%. Even the investment amounts are very affordable for those just starting off. Investments can be made through lump sums or through SIPs used in a manner similar to mutual funds. Lump sums invested in liquid funds can be as low as Rs.5,000.

Tax benefits

This is the realm in which liquid funds are far superior. Bank deposits usually offer lower interest rates but come with no risk. The interest rates on deposits can range from 4% to 7% and when you take tax deductions into account, the returns are further diminished. For those investors falling under the 30% tax bracket and holding a fixed deposit that offers an interest rate of 6.5% per annum, the interest rates received after tax deduction will wilt down to 4.55%

Liquid funds on an average have been earning more than bank deposits with interest rates averaging out at 8% to 9% per annum. This trend has been consistent over the past few years and even with a slump in interest rates of liquid funds as was witnessed last year, the funds still earned a rate of 7.5% which is comparatively higher than rates offered on bank deposits.

Another tax benefit of liquid funds is that the tax paid on annual interest rates does not occur annually as is the case with bank deposits. The tax is paid only when the fund is liquidated. Tax paid on returns is of two types. One is short-term capital gain tax which is levied on redemption of debt funds in less than 3 years or less than one year for equities. The second is long-term capital gain tax which is levied on redemptions made on debt funds after a period of three years.

How to invest in corporate fixed deposits efficiently?

Do you want to earn higher returns on your investments? You can switch from bank deposits to corporate fixed deposits and enjoy amazing returns! If you are not aware of how to invest in corporate fixed deposits, this article is the right choice for you. You can learn how to make a corporate fixed deposit without stressing about the risks associated with it.

Corporate fixed deposits tend to yield higher returns as they are not very well reputed when compared to bank deposits. When we focus only on the returns, we do not care about the risks. When we concentrate only on the risks, we are forced to go for something lesser. To tackle both these aspects, we can choose something in between and they are debt mutual funds.

You need to understand that corporate fixed deposits are highly risky even if the fund is rated well. The returns for these funds may be high or not. It depends on the market. When the rating of a particular fund goes down, there will be a delay in interest payments. Sometimes, the company may also fail to make your interest payment.

Debt mutual funds are better as they distribute this risk across different corporate fixed deposits and other forms of bonds. So, when you go for a debt mutual fund, you do not have to worry about heavy risks.

Meaning of debt mutual funds

A debt mutual fund is a blend of investments in which fixed investments are the primary holdings. A debt fund can deposit in short-term bonds, floating rate debt or long-term bonds, or money market instruments.

Types of debt mutual funds

Let us now take a look at some of the debt mutual funds:

• Closed-ended debt funds: These funds are also known as fixed maturity plans. These funds put money in debt securities like commercial papers, government bonds, treasury bills, corporate bonds, and certificates of deposit. A fixed maturity plan is generally given for 3 years and so the bond will correspond this period. If the rating of a particular bond goes down, you cannot sell it in a hurry because the debt fund is closed. So, panic selling will be avoided. The problem with this fund is that it is locked up until it gets matured. You will not be able to invest on a monthly basis with this type of fund.
• Open-ended income funds: An open-ended fund is a fund that allows an investor to subscribe or repurchase on a regular basis. The maturity period for these funds is not fixed. An investor can achieve both income and growth with this type of fund by buying a varied portfolio. This kind of fund will permit you to invest every month and rebalance according to your specific preferences. When a certain bond’s rating falls, the NAV will also drop. This may make you get restless and so you may start to redeem frantically. Therefore, if one bond does not work, the AMC may sell it even if it does not make any profits.
• Semi-closed-ended debt funds: These funds are also known as interval funds. These funds are generally closed for a certain period during which you cannot subscribe or redeem your plan. It will be opened for about two days during which you can redeem and invest additional amounts. These particular two days are together known as specified transaction period.

Debt mutual funds are very stable as opposed to equity investments. These debt funds will not be affected by the changing conditions of the equity market. You can also make your entire investment portfolio stable by investing in debt mutual funds. Hence, depositing money in debt mutual funds is a very good financial idea.

Fixed Deposit Double Scheme Yojana

Are you interested in saving money? You can achieve this financial goal by investing your money in the Fixed Deposit Double Scheme Yojana. The Fixed Deposit Double Scheme Yojana brought to you by the Government of India allows you to double your money in an efficient manner. There are many investment options available in the market that promise to double your funds. However, most of these options may not be genuine. When you go for the Fixed Deposit Double Scheme, you can be assured that your money will get doubled without having to worry about any risks or losses.

Meaning of Fixed Deposit Double Scheme

A Fixed Deposit Double Scheme that enables customers to double their funds within a certain period. This scheme is available in very few banks in India. According to the terms of this financial scheme, you will need to deposit a particular sum of money for a certain period which will be fixed. This money will yield some interest and this particular interest will help in doubling your money. You will receive the doubled money after the term of your deposit expires.

Features and benefits of a Fixed Deposit Double Scheme

Let us now take a look at the common features and advantages of a Fixed Deposit Double Scheme:

• Quick and simple to open: You can open a Fixed Deposit Double Scheme in your account quickly without much trouble. The documentation for this deposit scheme is simple.
• Minimum amount requirement: There is a minimum amount requirement for investing in the Fixed Deposit Double Scheme Yojana. The minimum amount will be different for each bank.
• Different interest for customers: Each category of customers such as senior citizens, etc. will have different interest rates. These interest rates will help in doubling the funds of the customers.
• Early withdrawal of money: With this type of scheme, you can withdraw money from your account before the due date. This scheme is flexible in nature. When you have medical or personal emergencies, you can withdraw from your account without any worries.
• Nomination: Individuals who have deposited in Fixed Deposit Double Scheme can nominate others in case of emergencies or demise.
• TDS benefits: You will be entitled to tax benefits under this scheme. When you gain interests from this deposit, you can enjoy TDS deductions.
• Loans: With a Fixed Deposit Double Scheme, you can apply for loans from your bank. With this, you do not have to worry about lengthy documentation processes.

Banks that give Fixed Deposit Double Scheme in India

These are some of the top banks that offer Fixed Deposit Double Scheme:

• Bank of Baroda: This bank has a scheme known as ‘Baroda Double Dhamaka Fixed Deposit.’ It assures to double the deposit money of investors. You can deposit any amount ranging from Rs.5,000 to Rs.1 crore. For senior citizens, the duration for the deposit to double is 105 months and 3 days. For others, it is 112 months.
• Tamilnad Mercantile Bank: This bank offers a ‘Double Deposit Scheme’ to both individuals and companies. The doubling period for senior citizens is 98 months and 10 days. The doubling period for others is 104 months and 11 days. The minimum amount to be deposited is Rs.1,000.
• Oriental Bank of Commerce: This bank has ‘The Oriental Double Deposit Scheme’. The minimum amount for this scheme is Rs.1,000. For senior citizens, the money will double in 105 months, for staff members, the money will double in 99 months, for the general public, the money will double in 114 months, and for former staff, the money will double in 96 months.
• Allahabad Bank: This bank offers the ‘Double Deposit Plan’. In this deposit plan, the funds do not get doubled as such. However, you will receive compounded interest on a quarterly basis on your deposit. This will give you better returns. The minimum amount to be deposited is Rs.1,000.
• Punjab National Bank: This bank offers the ‘Dugana Fixed Deposit Scheme’ which doubles your funds. You will have to deposit a minimum of Rs.5,000 to enjoy the benefits of this financial plan. Your funds will get doubled within 99 months.

You need to keep in mind that the tenure for your double deposit scheme will be determined by the bank and not by you. You can choose a Fixed Deposit Double Scheme if it suits your financial goals. It is flexible and simple in nature.

Small Finance Banks Compete for Term Deposits as Interest Rates Fall

Banks across the country are flushed with currency since demonetization of two of the most popular currency notes – Rs.500 and Rs.1000 was announced by Prime Minister Narendra Modi on November 8, 2016. In lieu of this move, interest rates across deposits and banks have been falling ever since and SFBs or Small Finance Banks are competing with each other to offer the best possible rates on the table.

How are SFBs capitalizing on interest rates post demonetization?

The main reason for slashing the interest rates off deposits have been to keep in check with the offtake of slow credit as the aftermath of demonetization. Customers of SFBs are now being offered interest rates that are up to 200 bps or basis points higher than the current market rates. Take for instance, Suryoday Micro Finance – the bank is offering its termdeposits at an interest rate of up to 9% p.a. depending on the tenure and senior citizens will receive an additional interest rate of 0.75% p.a. Even their savings accounts are being offered at an interest rate of 6.25% p.a. for up to Rs.1 lakh and for deposits between Rs.1 lakh and Rs.10 lakhs, an interest rate of 7.25% p.a. is being offered.

Utkarsh is another SFB that is offering their term deposits with interest rates of up to 8.5% p.a. and an additional interest rate of 0.50% p.a. for senior citizens. Utkarsh is also set to open 50 new bank branches over the span of 2 months and upgrade its present MFI or Micro-Finance Institutions into full-fledged banks this April, as communicated by the bank’s managing director, Govind Singh.

Ujjivan is another SFB that is prepared to offer interest rates on deposits that are higher than the prevailing market rates. Ujjivan’s focus so far has been only on wholesale deposits, but it is also preparing itself to raise interest rates for its retail deposits in the near future.

Equitas is offering interest rates up to 9% p.a. on their term deposits and between 6% p.a. and 7.5% p.a. on their savings account.

Capital Small Finance Bank is offering 4% p.a. interest rate on their savings account and 7% p.a. on their term deposits for a tenure between 5 years and 10 years. For senior citizens, the bank is offering an interest rate of 7.2% for a tenure of 400 days.

What does the future look like for SFBs?

The cost of funds for a majority of these Small Finance Banks have been 11% or more. However, as many SFBs are gearing themselves to convert their existing businesses into banks, their cost of funds will most definitely come down even if they are offering interest rates higher than the prevailing market rates.

However, most of the SFBs are said to initially focus on micro lending before transitioning into full-fledged retail banking. Due to this focus, most of the SFBs are proposing to keep their MCLR or Marginal Cost of Funds based Lending rate high.

According to the norms put forth by the RBI (Reserve Bank of India), SFBs have to start their operations latest by this April. RBI granted licenses to 10 SFBs in September 2015 and recently, 11 companies have been permitted to start payment banks.

Term deposits are a safe investment avenue for savers

   

It is advisable to put your hard earned money in different investment schemes to not only save for future use but also to earn better returns. Term deposits have proven to be a safe and good investment avenue for retirees, investors, and savers. Term deposit schemes are devoid of risks associated with market volatility. Its rates change on a regular basis. Deposit rates are calculated depending on the tenure of a fixed deposit. A fixed deposit tenure can be anywhere from a month to 10 years.

Types of term deposit schemes

A term deposit scheme is classified as short-term or long-term based on the tenure. The 2 types of term deposit schemes are:

• Short-term deposits: A short-term deposit scheme can have a tenure anywhere from 1 month to 1 year. Short-term deposit schemes are for those who have short-term savings goals. If you choose a short-term deposit scheme, ensure there is an option to renew your deposit after the end of the tenure. Short-term deposit schemes have lower interest rates compared to long-term deposit schemes.
• Long-term deposits: The tenure for a long-term deposit ranges from 1 year to 10 years. Choose a long-term deposit scheme with a competitive interest rate. Long-term deposit schemes with monthly interest earnings will offer lower interest rates compared to quarterly or yearly earnings. You should also look out for advance notice period for premature withdrawal of your deposit. If an advance notice period is required for the premature withdrawal of your deposit, then it may not serve your urgent financial need.

Features of a fixed deposit scheme

A fixed deposit account is a savings account in which you can deposit a principal amount once and earn interest on the deposited amount for a fixed tenure.

• You can deposit money only once in a fixed deposit account, unlike a savings account. To make another deposit you will have to open a separate FD account.
• The interest earned on a fixed deposit amount can be transferred to your savings account on a quarterly or monthly basis. This is not applicable for reinvestment schemes.
• You can renew the deposit for another fixed period after the end of the first tenure.
• Encashment of your FD can be done only at maturity. You will have to pay a penalty fee for partial or premature withdrawal of deposit.
• The interest earned on your fixed deposit amount is subjected to tax deduction at the source.

Fixed deposits are preferable to savings accounts as the FD interest rate is higher for FDs.

Advantages of having a fixed deposit account

In addition to saving money, listed below are other benefits of owning a fixed deposit account:

• A fixed deposit can be used for tax benefits under Section 80C of the Income Tax Act.
• You can also use your FD account as collateral to obtain loans or overdraft.
• Some banks offer higher interest rates on FD to customers above 60 years of age. You can open a joint account with a senior citizen to get a slightly higher interest rate on your FD.
• A FD can be used to improve your credit score.
• You can obtain secured credit cards using your FD.

Deposit rate cuts post demonetisation

Before investing in a term deposit scheme, compare the deposit rates across banks and choose the one with the highest rate to earn better interest on your savings. Indian banks were offering up to 9% interest rate on FDs. However, following the demonetisation of Rs.500 and Rs.1,000 currency notes last November, banks are now flush with cash. The drastic increase in cash inflow has brought down the cost of funds. Therefore, many national banks have reduced their deposit rates. Currently, Ratnakar Bank is offering the highest interest rate on FDs with tenure ranging from less than 1 year to more than 10 years at 7.50-7.70% p.a.

Can debt mutual funds be the perfect alternative to fixed deposits and Term Deposits?

Equity mutual funds can definitely prove to be a suitable option for several people with long term investment plans. However, there can be situations when the equity is not very suitable. The reasons are as follow:

The goals that you set are only five years away.

• You are not comfy with volatility and you are also ready to adjust the expectations of growth accordingly.
• The objectives of growth will be met with a return rate of 8 % to 9 %.

In case you are in such a position, you have two options to choose from. Debt Funds and Bank Fixed Deposits and TermDeposits. Let us compare them on different grounds.

• The security of your capital is pretty much the same – In order to know if your money is safe or not, you must take a look at the credit rating of this instrument. This is provided by the independent agencies for credit rating using the scale below.

Rate	Issuers	Meaning
Sovereign	Indian Government	Absolutely safe
AAA	Public sector undertakings, most banks, stable big companies	Very safe (high degree of safety)
AA	Private organizations	Considerably high safety
BBB	Private organizations	Below average
BB, B, C or Lower	Private organizations	Poor

Mostly fixed deposits and term deposits are extremely safe and they are rated as AAA. In other words, there is no chance that you will lose the money that you invested. It is often assumed that the government guarantees fixed deposits. It is true that the government guarantees fixed deposits but only till an amount of Rs 1 lakh. Above that, the bank’s credit rating plays a major role. The selection of the bank is also vital. The debt funds do not come with ratings. However, the safety with debt funds can be deduced. It typically lies between Sovereign and AA. If you choose carefully, you might be able to select a debt fund that comes with a combined credit risk similar to fixed deposits.

• The rate of interest gets locked when you invest in fixed deposit. At present that rate is 8 % to 9 %. This is applicable for a tenure that is above one year. You will be able to fd calculator the exact amount that you will get when the deposit matures. The debt funds offer 8 % to 9 % returns too. However, there is no guarantee about the returns. Debts funds are definitely safe but there can be situations when there is volatility due to interest rate fluctuations.
• The income that you get from debt funds and fixed deposits are categorized differently. Debt funds offer dividend or capital appreciation. The interest amount that you get from the bank fixed deposits are taxable. On the other hand there is hardly any tax deduction on the debt funds after a period of three years. The tax that you pay on your debt funds within the 1 to 3 year time frame is pretty low. Up to the end of the first year, the tax impact for debt funds and fixed deposits are same. Every year, taxes must be paid for the interest earned of FDs. Thus, the amount of money that accumulates becomes lesser.
• In case you need money before your fixed deposit matures, you will be getting lesser interest than you should. Along with it, you will also have to pay penalty charges for withdrawing the amount before maturity. Some of the banks might allow you to withdraw from your FD in part. However, most banks would ask you to take the entire amount when you wish to break the FD. For example, if you have Rs 2 lakhs in your fixed deposit account and you wish to take only Rs 40,000 from it, you might not be allowed to do it. You will be asked to withdraw the entire deposit of Rs 2 lakhs. On the other hand, debt funds offer you full liquidity for the investments you make. Any amount can be withdrawn from the debt fund value as per your needs. The money will be transferred to your bank account within a period of 3 to 4 days. The return that you receive is the money earned by your debt fund over the investment period. No complex formula is associated with it.
• Since the FDs are taxable, records must be maintained about your investments. You must compute the income that you will earn from the interest and then file the taxes for it. Things get complicated further when you withdraw money before your FD matures. In case of debt funds, the only tax that you have to pay is on capital gains when you withdraw. This means, you might pay for the taxes only once in five years.