Taxation of Corporate Fixed Deposit

POSTED BY Ravi Trivedi ON September 16, 2011 10:26 am COMMENTS (2)

I realize that FMP (Fixed Maturity Plans) that are for longer than 1 yr have lower taxation rate, than Bank Fixed Deposits.

How are Corporate (Company) Fixed Deposits treated for taxation. I am looking to get a 13 month company fixed deposit.

 

 

 

Thanks

 

 

2 replies on this article “Taxation of Corporate Fixed Deposit”

  1. TaxSpanner says:

    The tax on FMP is lower due to indexation benefit, if the period is more than one year. However, the returns are not guaranteed, as in the case of a fixed deposit. Those who can take a little risk, especially those are in higher tax slab, should go for FMP to minimize tax. Corporate deposits are not as safe as bank deposits. Plus, the TDS is deducted if the interest is above Rs 5,000/- whereas banks deduct TDS if the interest income is above Rs 10,000/-.
    Balanced mutual funds offer the most tax efficient returns with lower risk, by investing in debts up to 35%. However, the period of holding should be longer.

  2. Abhishek says:

    Hi Ravi,

    There is no difference between taxation of Bank Fixed Deposit and Company Fixed Deposit. The interest is added to your income and taxed as per your tax slab.

    Regards
    Abhishek

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