Corporate Fixed Deposits (FD): Higher Returns on Investment

A corporate Fixed Deposit (FD) is a type of term deposit offered by Non-banking Financial Companies (NBFCs) and corporates. It functions similarly to a bank FD, where you invest a specific amount for a fixed tenure at a predetermined interest rate. However, corporate FDs may offer higher interest rates compared to bank FDs, as they carry more risk, making them an appealing option for investors seeking higher returns.

Here are the current corporate FD rates from some of the leading NBFCs in India:

Note:  The interest rates and credit ratings are subject to change. Check the NBFCs’ website for up-to-date information on corporate FD interest rates.

A corporate FD calculator estimates your returns. Enter your user type, deposit amount, tenure, and payout frequency. The calculator shows the interest rate, interest earned, maturity amount, and maturity date. It helps you compare options and choose the best corporate FD online on Bajaj Markets.

 

Here is an example that explains how a corporate FD calculator works.

 

Invest ₹1,00,000 in a Corporate FD for 4 years, with monthly interest payouts.

• Input User Type: Choose the General Citizen option

• Enter Deposit Amount: Input your initial investment as ₹1,00,000

• Select Tenure: Choose a deposit tenure of 4 years

• Choose Payout Frequency: Select monthly

 

Upon entering these details, the calculator will display:

• Interest Rate: 8.05% p.a.

• Interest Earned: ₹31,125.36 (over 4 years, paid monthly)

• Maturity Amount: ₹1,31,125.36 (Principal and Interest amount)

• Maturity Date: February, 2028

Interest earned from corporate fixed deposits is fully taxable. This is under the Income Tax Act, 1961. The interest is added to your total income for the year. It is taxed according to your income tax slab.

Tax Deducted at Source (TDS)

If your interest income from all FDs is less than ₹40,000 in a year, then that income is exempt from TDS. However, if your interest income exceeds ₹40,000 as a regular citizen or ₹50,000 for senior citizens, TDS at 10% is applicable. If you do not furnish your PAN details, TDS will be deducted at the rate of 20%.

Reporting Your Interest Income

Declare your full interest income under ‘Income from Other Sources’. This is crucial when filing your tax returns. If your total tax liability exceeds the TDS deducted, you must pay the difference. However, if the TDS exceeds your liability, you can claim a refund.

Before you invest in a corporate fixed deposit, consider these essential tips to maximise returns and minimise risk.

Evaluate the NBFC’s Credit Rating

Check the credit rating of the NBFC or corporate before investing. Higher-rated companies (AA or above) offer lower risk, ensuring safer investments.

Compare Interest Rates

Browse and compare rates across NBFCs and corporates to secure the highest interest rate.

Understand the Tenure

Choose a tenure that fits your financial goals. Longer tenures may offer better rates but will lock in your funds for an extended period.

Consider the Payout Option

Decide between periodic interest payouts or a cumulative option with payment at maturity. Cumulative FDs generally yield higher returns due to the power of compounding.

Know the Penalties for Premature Withdrawal

Understand the penalties for early withdrawal, as most corporate FDs impose a fee. This could significantly lower your returns.

Diversify Your Investment

Spread your investments across multiple corporate FDs to reduce risk. Diversifying among FD providers and tenures helps manage your portfolio better.

Tax Implications

Interest earned from corporate FDs is taxable. Account for TDS and other tax liabilities when calculating net returns.

Read the Fine Print

Carefully review the terms and conditions, including payout structure and fees. Understanding these details will help you make an informed decision.

Use an FD Calculator

An FD calculator can estimate returns and help compare options. Use this tool to tailor your investment strategy to your financial goals.

Some general eligible applicants for corporate fixed deposits may include:

• Resident Indians

• Up to three individuals can hold a joint FD depending on the 

• Hindu Undivided Families (HUFs)

• Registered entities like trusts and societies 

• Partnership firms and companies, including private and public limited companies

• Recognised organisations and clubs

• Registered co-operative societies  

Here's a simple guide to investing in corporate fixed deposits through Bajaj Markets.

1. Explore and compare corporate FD options, rates, tenures, and features

2. Select the corporate FD that matches your financial goals

3. Fill in your details, including the deposit amount, tenure, and payout option

4. Upload required documents like identity proof, address proof, and PAN card

5. Complete the payment through a secure online method

6. Receive a confirmation of your FD booking

Corporate fixed deposits generally offer higher returns than bank FDs. Compare company FD rates, credit ratings, and tenures to ensure you earn the desired returns. Use the Corporate FD calculator on Bajaj Markets to make an informed decision.