LIC Fixed Deposit

LIC Housing Finance is among the most reliable term deposit providers. LIC offers several benefits to its depositors. For example, it offers high-interest rates, has flexible tenures and also offers loans against the deposits. In this article, we have covered about LIC FDs and its interest rates in detail.

Features of LIC Housing Finance Fixed Deposit 

LIC term deposit schemes offer significant returns. Following are the key features of LIC term fixed deposits:

Eligibility and Documents Required

To open an FD account in LIC Housing Finance, one has to be eligible. Following are the individuals that are eligible to invest in LIC FDs.

• Individuals, and for minors, a joint account along with a guardian
• Sole proprietors
• Partnership firms
• Joint-stock companies
• Hindu undivided families (HUF)
• Clubs, associations and trusts
• NRIs

To open a term deposit account in LIC Housing Finance, one needs the following documents.

The documents that one requires to invest in LIC FDs are

• FD application form
• 2 Photographs of the depositor
• PAN Card
• ID proof (Aadhar Card, PAN Card, Driving License, or Passport)
• Address proof (Aadhar Card, Electricity Bill, Telephone bill or any other utility bill)
• Age proof (Birth certificate, Discharge certificate PAN Card, or matriculation certificate)

Additional Payments and Safety

LIC Housing Finance does not allow depositing any additional amount in an existing fixed deposit. However, one can always open a new FD to deposit the additional amount. Under the Deposit Insurance Scheme of RBI, DICGC insures all LIC deposits up to INR 5,00,000. Furthermore, the LIC deposit schemes have an AAA or AA by the rating agencies. This indicates that the deposit has the highest safety.

Tax and TDS

Investment in LIC Housing Finance FD qualifies for tax saving under Section 80C of the Income Tax Act, 1961 if the tenure is for five years. Depositors can claim the exemption while filing income tax returns.

The interest that one earns on their LIC FD  investments is taxable as per the depositor’s income tax slab rates. Furthermore, the LIC deducts a TDS of 10% (20% if PAN card isn’t submitted) in case the interest income exceeds INR 40,0000 (INR 50,000 for senior citizens).

To determine if the interest income from a LIC Housing Finance term deposit is above or below the TDS threshold limit, one can use the FD calculators available online. Also, depositors can estimate their tax liability using the Income Tax Calculator. Scripbox’s online Income Tax Calculator helps in estimating tax liability and is free to use.

Premature Withdrawal

LIC allows premature withdrawal of fixed deposits but with a penalty of 2% on the contracted rate of interest.

Nomination Facility and Auto Renewal

Depositors can nominate beneficiaries for their LIC FDs. Also, LIC offers an auto-renewal facility for deposits.

Pan Card

Though a PAN card isn’t mandatory while opening a LIC FD, there are few implications of not disclosing PAN details. The applicable TDS rate will be 20% instead of the usual 10%, as per the regulations of section 206AA. The LIC will not issue any TDS certificate. And all exemption certificates, including Form 15H and Form 15G, will be invalid.

LIC HFL Fixed Deposit Schemes: In Detail

• Sanchay Deposit
• Cumulative Deposit Scheme
• Non-Cumulative Deposit Scheme

Sanchay Deposit

• Tenure: 1 year to 5 years
• Minimum Deposit Amount: INR 10,000 for yearly option and INR 2,00,000 for monthly option.
• Maximum Deposit Amount: No Limit
• Interest Payout: Depositors can choose a suitable interest payment frequency, monthly or quarterly or annually.
• Joint Account: Available, a maximum of three members, can hold the account jointly.
• Loan Facility: LIC Housing Finance FD depositors are eligible for availing loan against their FD.
• Auto-Renewal Facility: Available
• Nomination Facility: Available

Cumulative Deposit Scheme

• Investment tenure- 1 Year, 18 Months, 2 Year, 3 Year and 5 Year
• Interest will be compounded annually
• Interest will be paid on maturity along with Principal Amount
• TDS is deducted at the rate applicable under section 194A
• Minimum investment amount of Rs 20,000 in multiples of Rs 1,000.

Non-Cumulative Deposit Scheme

• Monthly Interest payment and Annual Interest payment
• Investment period- 1 Year, 18 Months, 2 Year, 3 Year and 5 Year
• Attractive card rates for deposit amount upto Rs 20 Crore and above Rs.20 Crore for all tenure.
• Interest is payable annually on 31st March under Annual Option
• Interest is paid on the 1st day of the month and on 31st March for the month of March under Monthly Option.
• Annual FD- Minimum Amount: Rs. 20,000 and thereafter in multiples of Rs. 1,000
• Monthly FD- Minimum Amount: Rs. 2,00,000 and thereafter in multiples of Rs. 10,000

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