Corporate Deposits are loan arrangements where a specific amount of funds is placed on deposit under the name of the account holder. The money placed on deposit earns a fixed rate of interest, according to the terms and conditions that govern the account. The actual amount of the fixed rate can be influenced by such factors at the type of currency involved in the deposit, the duration set in place for the deposit, and the location where the deposit is made.
Corporate Deposit
Corporate Fixed Deposits are parallel to Banking FD’s, except that the money invested is with a company and not with a bank. Deposits under Corporate FD’s are governed by the Indian Companies Act 1956 under Section 58A.However, these deposits are unsheltered. Therefore, if the company defaults, the investor cannot sell the company to recover his/her capital. Contrary to this, corporate FD’s apart from giving a superior interest rate than banks, also provide investors with a short-term deposit option with only a six month lock in period as well as the benefit of having no income tax deducted at source if the interest income is up to Rs 5,000 in one financial year. Investments can also be spread in more than one company, so that interest from one company does not exceed Rs 5,000.
Benefits of investing in Company Fixed Deposits
- High interest.
- Short-term deposits.
- Lock-in period is only 6 months.
- No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year
- Investment can be spread in more than one company, so that interest from one company does not exceed Rs. 5,000
These precautionary reviews and steps will be taken on your behalf by GIIS Financial to ensure great returns with low risks.