Corporate FD
FDs are one of the oldest and most common methods of investing. Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. A company fixed deposit offers guaranteed returns which is generally higher than the ones offered by banks. The rate of interest offered to you when you open an FD remains constant throughout your tenure. Even if the interest rates fall in the broader market, your FD won’t be affected. You, therefore, don’t have to worry about the ups and downs of the market. If you choose an FD with a reinvestment option, you will benefit from compound interest. If you wish to get a regular income, you can opt for monthly, quarterly, Half-yearly & Yearly interest pay-outs.
Features:
Non-transferable
Company Fixed Deposits are non transferable. In case it falls into wrong hands, it cannot be misused.
Liquidity
Premature encashment of deposit is available any time subject to payment of prescribed penalty.
Diversify Risk
The deposits should be spread over a large number of companies engaged in different industries. This way, you’ll be able to diversify your risk among various industries/companies.
Wide Choices
Many companies operating in the Company Deposit market. This will help you decide whether to renew or reshuffle the deposit.
Attractive rates as applicable from time to time.
How to choose a good company deposit scheme?
Don’t go for Companies which offer interest much higher than market.
Ignore unrated Company Deposit Schemes. Look at only AA or AAA rated schemes.
Tax Deductions on Company Fixed Deposits
TDS will be deducted when interest payable or reinvested per customer, per company exceeds the amount applicable as per statutory rules in a financial year.