What Is The Full Form Of FDR In Income Tax?
FDR full form in income tax is Fixed Deposit Receipt. It’s a document that banks, financial companies, or post offices give to a person when they put money into a fixed deposit. This receipt will indicate your deposit, evidently the amount of money you have deposited, the timeframes, and the interest rates. The document is very key for the record of accounts, more so when it comes to matters relating to taxes.
Importance and Utility:
An FDR is important not just as proof of your investment but also because it helps when you want to get a loan using your fixed deposit as security, usually at better interest rates. Such activities as obtaining tax deductions on the interest earned by the depositor from the deposit are sure to become quite relevant. In some cases, if one day you lose the receipt, the bank can also help you to provide another one to make sure your rights are kept protected.
Tax Effects and Advantages:
When you start a fixed deposit, the institution will give you an FDR that you should keep safe until the deposit ends or is withdrawn. The money you earn as interest from fixed deposits is taxable under the Income Tax Act. The FDR bears all the necessary things with it for filing your tax returns. You can also get the benefit of tax breaks under Section 80C of the Income Tax Act on many types of fixed deposits. Also, the older a person is, the more he gets the interest rate, and these are reflected too in the FDR.