TDS or Tax Deduction at Source is a taxation done on the interest earnings of a Fixed Deposit. However, not all interest incomes qualify for TDS - when the interest earned from a fixed deposit exceeds INR 10,000 in a financial year, the financial institution taxes it at a particular percentage (usually 10%). This financial institution can be a bank or a Non-Banking Financial Company (NBFC). This tax tends to diminish the returns on investment of the FD.
With a little bit of planning, TDS can be avoided. Listed below are a few practical ways how one can enhance earnings from an investment in an FD of a bank or an NBFC: Timing the Investment Right The easiest way to save up on TDS is by opening an FD account at a time when the interest income gets divided over two financial years. In this manner, TDS is not done as the condition for the income exceeding the specified taxation threshold of INR 10,000 is not fulfilled. Also check :- TDS on Fixed Deposit Dividing the Corpus and Investing in Multiple FDs The next way to save up on TDS is by dividing the amount to be invested and parking the same in multiple fixed deposits of different banks or NBFCs. The investor can also invest in multiple FDs of a single financial institution. In this way, the returns do not exceed INR 10,000 and TDS is thus saved. An additional benefit of investing in this manner is that the risk gets minimized. Tax Deduction at Source can also be avoided by opening a joint fixed deposit account. Here, the individual with higher tax liabilities (i.e. higher income) should not be the primary holder of the joint FD account. To know more about the remaining practical ways to save TDS, the resource given below should be followed: How to avoid TDS on Fixed Deposits?
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Talking about investment, there are many choices available in the market and each one of them has its own pros and cons. Even then, most of the investors are stuck with the dilemma: fixed deposit or mutual funds. Honestly speaking, both of them are good in their ways owing to their distinct qualities. The decision depends on your nature and expectations from the investment. Hence, let's take a look at major differences between the two investment tools to determine the better one. Fixed deposit VS Mutual funds: The Major Differences
Bottom line: If you have a low risk appetite and expect a decent return from your investment, invest in fixed deposit. Otherwise, mutual fund is also an option. Visit: Fixed deposits vs Mutual Funds - Where to Invest? A recent census put the count of senior citizens in India at 10 crores- in support of this group of individuals who are 60 years of age or older, financial and health related benefits have been introduced. Starting with dedicated insurance plans, there are several financial perks to look forward to. Finance related benefits can be grouped into two categories, which have been listed below:
About Specialized Investment Plans for Senior Citizens In this category of financial benefits, the following investment vehicles are the top picks: Fixed deposits for senior citizens are provided by most banks as well as Non-Banking Financial Companies (NBFCs). The rate of interest offered on such schemes are quite high when compared to similar schemes for non-senior citizen investors. The maximum interest income is of the range of 8.20%. Senior Citizens Savings Schemes are another viable option wherein investors can invest as much as INR 15 lakhs for a period of 5 years to earn annual interest of 8.3%. The interest is paid on a quarterly basis. This scheme is provided by banks and post offices. Read: Tips to Boost your Savings for Retirement About the Income Tax Benefits for Senior Citizens There are two income/age slabs defined when it comes to tax benefits for individuals who are 60 years or older. A maximum yearly income of INR 3 lakhs for senior citizens (age between 60 years and 80 years) is exempted from income tax. Likewise, individuals who are 80 years or older are considered super senior citizens- for such individuals, the maximum exemption limit for income tax is set at INR 5 lakhs. Moreover, under the Income Tax Act of India, specific Sections like 80 D, 80 DDB and 80TTB provide exclusive tax benefits to senior citizens on their income that can be utilized with the investment income or other financial aspects such as insurance. Read: Get Complete Investing Guide Fixed deposit is provided assured returns, is highly stable and yields the highest returns; but the inimitable advantage that has sustained FD at no 1 is - tax benefits. But before proceeding with FD with a desire to obtain tax benefits, ask yourself - do you really know how to leverage the tax-reclaim provisions? A large number of investor who invests in FD (Fixed Deposit) to save taxes often end up disappointed, immediately regretting taking an uninformed decision. Proper planning and adequate understanding of the facts are inevitable prerequisites for people planning to invest in fixed deposit. So, to avoid regrets and turn fixed deposit into a prosperous decision, here are a few ways you can leverage the tax-deduction provisions.
Bottom line: Investing in the FD scheme provided by reputed financial institutions like Bajaj Finserv entitles you to dual benefits: higher return on investment owing to the high-interest rate, and on-request professional tax-saving tips by investment experts. Read More : Save Tax on the Interest earned through Fixed Deposits Confused? Visit Bajaj Finance Customer Care page to speak to our customer care representative. Have any Doubt? Read unbiased Bajaj Finance Reviews to know more about Bajaj Finance Fixed Deposit. Visit Bajaj Finance Terms and Conditions page to know all the T&C for Fixed Deposit in India. |
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About Author:Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms. Archives
August 2022
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