5-Year Cumulative FD: Secure Your Future, Maximize Returns with Smart Planning!

• 5-year cumulative FDs are popular for their complete security and guaranteed, compounded returns.
• Interest is compounded quarterly or annually and paid along with the principal at maturity.
• Tax is levied annually on the accrued interest, even though the actual payout is only at maturity.
• TDS is deducted if annual interest exceeds Rs. 40,000 (Rs. 50,000 for senior citizens); Form 15G/15H can prevent this.
• These FDs are not suitable for those needing regular income; non-cumulative FDs offer monthly/quarterly payouts but lower interest.

Why It Matters: Cumulative FDs offer secure, compounded returns at maturity, but understand annual tax implications.