3 Ways to Save Tax on Fixed DepositsInvestment OpportunitiesUpdated on Apr 23, 2019 View more like this | Visit India, UN | Contact samrat saini |
If you are new to the world of investments, Fixed Deposits can be the perfect way to start the ball rolling. Though the returns aren’t exceptionally impressive, Fixed Deposits offer fixed tenures and reasonable interest rates, making it a safer investment bet than other co-existing options.
In simple words, a Fixed Deposit requires you to input a lump sum of money in the bank for a specific period of time. You earn interest on this amount based on the tenure and the scheme offered by the bank or NBFC. You can easily calculate how much you stand to gain by using free online Bajaj Finance FD calculators, which will help you do the math conveniently. Therefore, Fixed Deposits are a favourable choice for people seeking risk-free investment options.
Returns from Fixed Deposits are steady and profitable if you go for the highest FD rates available in the market. What many investors don’t know is that they can save tax even on the interest earned on
Fixed Deposits. Here are some effective ways to help you save tax on your FDs.
Using form 15G
Your FD interest won’t be taxable if your yearly incomes are below Rs.2.5 lakh. To prove that you don’t fall under the taxable bracket, you’ll have to fill and submit Form 15G. If you do this, the bank won’t deduct any TDS on the interest you earn through your FD.
Distribute FD Investments
Though the amount invested in an FD is exempted on tax returns, interest earned under a Fixed Deposit is still taxable through ‘income from other sources’ under 80C of the Income Tax Act. If the amount exceeds Rs.10,000, the interest earned through the FD will be eligible for tax deduction at source (TDS) at the rate of 10%. An effective method to avoid TDS is by distributing your FD investment amount into separate banks in a way such that interest earned from any of the FDs does not exceed the Rs.10,000 limit.
Distributing your FD investments can also come in handy in times of urgent withdrawals. If you are ever in need of some immediate cash, you’ll be able to arrange funds without drastically disrupting the health of your total investment. Even if you end up breaking a couple of accounts before maturity, you can still continue earning interest on the remaining accounts.
Timing is the Key
You can time your FD investment in such a manner that the earned interest of a particular financial year does not exceed Rs.10,000.
For example, a 1-year Fixed Deposit of Rs.90,000 at 10% could be started in October since the financial year closes on 31st March. Doing this will split your interest in two financial years and help you save money on income tax.
In simple words, a Fixed Deposit requires you to input a lump sum of money in the bank for a specific period of time. You earn interest on this amount based on the tenure and the scheme offered by the bank or NBFC. You can easily calculate how much you stand to gain by using free online Bajaj Finance FD calculators, which will help you do the math conveniently. Therefore, Fixed Deposits are a favourable choice for people seeking risk-free investment options.
Returns from Fixed Deposits are steady and profitable if you go for the highest FD rates available in the market. What many investors don’t know is that they can save tax even on the interest earned on
Fixed Deposits. Here are some effective ways to help you save tax on your FDs.
Using form 15G
Your FD interest won’t be taxable if your yearly incomes are below Rs.2.5 lakh. To prove that you don’t fall under the taxable bracket, you’ll have to fill and submit Form 15G. If you do this, the bank won’t deduct any TDS on the interest you earn through your FD.
Distribute FD Investments
Though the amount invested in an FD is exempted on tax returns, interest earned under a Fixed Deposit is still taxable through ‘income from other sources’ under 80C of the Income Tax Act. If the amount exceeds Rs.10,000, the interest earned through the FD will be eligible for tax deduction at source (TDS) at the rate of 10%. An effective method to avoid TDS is by distributing your FD investment amount into separate banks in a way such that interest earned from any of the FDs does not exceed the Rs.10,000 limit.
Distributing your FD investments can also come in handy in times of urgent withdrawals. If you are ever in need of some immediate cash, you’ll be able to arrange funds without drastically disrupting the health of your total investment. Even if you end up breaking a couple of accounts before maturity, you can still continue earning interest on the remaining accounts.
Timing is the Key
You can time your FD investment in such a manner that the earned interest of a particular financial year does not exceed Rs.10,000.
For example, a 1-year Fixed Deposit of Rs.90,000 at 10% could be started in October since the financial year closes on 31st March. Doing this will split your interest in two financial years and help you save money on income tax.
