How to Gift an FD to Someone: Can FD Be Gifted

Gifting a fixed deposit is a thoughtful way to offer financial security and long-term value to someone you care about. Unlike traditional gifts, an FD continues to grow over time, helping the recipient build savings while earning steady interest. Whether it is for a child, parent, or loved one, understanding the process, tax implications, and key considerations can help you make this gesture more meaningful and financially beneficial.

Continue reading to learn how to gift a fixed deposit, what to keep in mind before doing so, and how it can become a practical gift for future stability.

Quick Synopsis

• Fixed Deposits can be gifted as a safe and thoughtful financial gift.
• The process involves opening an FD in the recipient’s name.
• Tax liabilities depend on the relationship between giver and receiver.
• Consider tenure, nominee details and financial goals before gifting.
• Online FD platforms make gifting easier than ever.

How to Give Fixed Deposit as a Gift?

Gifting a fixed deposit is one of the simplest ways to create long-term financial value for someone you care about.  It is important to follow a few key steps carefully mentioned below to make sure the gift is valid and beneficial for the recipient:

Compare FD Rates

There are several banks and NBFCs offering Fixed deposits with different interest rates. Before booking an FD compare these banks and NBFCs FD interest rates to select the one which offers the highest rate.

Open an FD in the Recipient’s Name

Next open fixed deposit account online or by the visiting the bank branch in the recipient’s name. The minimum deposit amount varies across institutions so check the bank’s or NBFC’s specific requirements.

Submit Essential Documents

Provide all mandatory documentation including the recipient’s KYC details such as PAN, Aadhaar and address proof. Banks require these documents for verification at the time of booking an FD.

Discuss Tenure and Withdrawal Rules

When gifting Fixed deposit explain recipient about its tenure and withdrawal rules to help them understand how and when they can access these funds.

Once these steps are completed, the recipient becomes the legal holder of the FD and earns interest directly in their account. It is a simple yet meaningful way to offer financial stability and encourage smart saving habits.

Tax Implications of Gifting a Fixed Deposit

While learning how to gift an FD to someone, it is important to also understand the tax rules behind it. Under the Income Tax Act, 1961, gifts exceeding ₹50,000 in a financial year are taxable in the hands of the recipient, unless given to a relative. Relatives include parents, siblings, spouse or lineal descendants like children and grandchildren.

Key Considerations Before Gifting a Fixed Deposit

Before you decide how to gift an FD to someone there are a few practical and financial aspects to keep in mind. An FD might look simple, but the right planning ensures the recipient gets the full benefit of your thoughtful gift.

Here is what to keep in mind before gifting it to someone:

Gifting Method

Check whether your bank allows direct gifting as some banks offer digital FD gifting options where the onboarding is completely paperless and offer a higher rate of interest.

Tenure and Interest Rate

Choose a tenure that aligns with the recipient’s financial goals. Most banks and NBFCs offer interest rates between 5.00% to 8.00% for 7-day to 10-year deposits, depending on the institution.

Premature Withdrawal Rules

Check if the recipient can withdraw the FD before maturity. Some banks impose penalties ranging from 0.5% to 1% of the interest rate.

Gift Documentation

Always maintain a written record or gift deed, especially for high-value FDs. This ensures transparency and helps with tax filings later.

Taking these points into account while understanding how to gift an FD to someone will ensure your FD gift does not lead to any confusion.

Alternatives to FD Gifts for Long-Term Returns

Depending on the recipient’s age and goals, you might consider alternatives that balance stability with higher growth. Here are a few alternative options:

• Mutual Funds: They offer better inflation-adjusted returns for long-term wealth creation.
• Prepaid Gift Cards: They offer flexibility, which lets the recipient decide when and where to use the funds.
• Stocks and Bonds: Stocks can provide dividends and capital appreciation, while bonds offer stable, fixed returns.
• Medical Insurance: With healthcare costs rising in India by nearly 13-14% annually as of 2025, gifting a health insurance policy is one of the most valuable things you can do.

Each of these options has its own benefits and risk level, but they all help your loved ones grow their money responsibly.

Conclusion

Gifting an FD is more than a financial gesture; it is a symbol of care and stability. When chosen thoughtfully it can offer peace of mind and long-term security to your loved ones. Before gifting, always check tax implications and the bank's terms to ensure the process is smooth and transparent.

Looking to gift a Fixed Deposit to your loved ones? Download the Stable Money app today to compare the best FD interest rates, invest securely and make your next gift a truly valuable one.