IndiaSphere

In Budget 2006, the government extended tax benefits to five-year tax-saver deposits. As per the existing provision, you are eligible for exemption on five-year deposits on investments up to Rs 1 lakh. These fixed deposits will be locked for a five-year period from the effective policy date. So, you cannot exercise the option of premature withdrawal. Secondly, you cannot pledge the term deposit as collateral to secure a loan to meet your liquidity needs. Similarly, banks do not offer overdraft facility on tax-saver deposits.

Unlike the plain vanilla fixed-deposit products, these tax-saver FDs do not have the sweep-in facility. This implies, you cannot link fixed deposit to the savings account whereby the surplus funds in the savings account can be automatically invested in this fixed deposit. Read More…...
http://moneybhai-investors.blogspot.com/2008/02/tax-saving-fixed-deposit…