Introducing Company Fixed Deposits
Deposit(s) in Companies that earn a “fixed rate of return” over a period of time are called Company Fixed Deposits. Financial Institutions and Non-Banking Finance Companies (NBFCs) accept such deposits. Acceptance of deposits by companies are governed by the applicable provisions contained in the Companies Act, 1956 (soon will be governed by the Companies Act, 2013) and the Companies Acceptance of Deposit Rules (currently, Companies (Acceptance of Deposit) Rules, 1975. In due course, the new Rules under the Companies Act, 2013 is expected to be notified). These deposits are currently unsecured in nature. However, there are certain proposed provisions included in the Companies Act, 2013, wherein it is likely that the said deposit could be secured
Benefits of investing in Company Fixed Deposits
- High interest.
- Short-term deposits.
- Minimum lock-in period is 6 months.
- No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one financial year