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Apart from other investments, you may have also invested in a fixed deposit to
benefit from high returns, low risk, and tax benefits, especially after the
Interim Budget 2019 increased limit of interest income accruing TDS from
Rs.10,000 to Rs.40,000 for bank FDs. In this busy time on the year approaching
tax filing season, you have to declare your income and investments or
expenditures after careful consideration and calculation so as to avoid paying
extra tax. To ensure this, you can use the FD calculator to ascertain your taxes
with great clarity.
What is an FD calculator and how to use it?
An
FD Interest Calculator is an online tool that calculates your FD income and
maturity amount for a given deposit amount and tenor by applying the right FD
interest rates. Some calculators pick up the FD interest rates of the issuer
automatically based on your input. An FD calculator is simple and easy to use.
All you have to do is input details like your profile, deposit amount, tenor,
and interest rate to compute your maturity amount and interest earnings.
Why use an FD calculator?
To benefit from accuracy and automatic input of rate
Using an FD calculator is easier than doing manual computations and ensures
accuracy. It is also a fast and convenient method of computation as you get
results in an instant and can use this online tool no matter where you are.
Secondly, most issuers offer different rates of interest depending of the type
of customer you are: existing, new, and senior citizen. Depending on the details
that you input, the calculator picks an interest rate that is applicable to you
and shows you the final maturity amount. This way, you won’t make mistakes when
it comes to the interest rate applicable to you.
To declare FD income
In addition to maturity amount, an FD calculator also shows you the FD interest
you stand to get. Declaring the right FD income is of utmost importance when it
comes to filing taxes. If you declare a higher interest figure, your taxable
income will increase to that extent and so will your tax payable. Even though
you can claim for a refund later, it is wise to avoid the complications in the
first place.
To ladder Fds
Laddering fixed deposits means investing in multiple FD schemes of various
tenors so you can receive the maturity proceeds at various points in time.
Laddering FDs and aligning them with your financial goals ensures that you have
enough liquidity to meet all of them without any stress. For instance, say that
you want to buy a home after 3 years. To arrange for the down payment, you can
invest in a 3 year cumulative FD. Additionally, you can invest in another FD for
5 years and assign it to your kid’s education and so on. However, when it comes
to taxes, there is another advantage of laddering. This ensure that you control
how much interest income you receive in one financial year so that you don’t
cross the TDS limit or keep your taxable income down.
Example to how to calculate your taxable income
Say your income is Rs.8 lakh and you invest in an FD offering you interest
earnings of Rs.50,000. Here, your issuer will deduct TDS at 10% as your income
is over the threshold of Rs.40,000. This means your TDS is Rs.5000. Here your
total tax on FD income will be calculated at 20% as you fall within the tax
bracket of Rs.5,00,001 and Rs.10 lakh. So, your total tax on FD interest is
Rs.50,000 X 20/100 = Rs.10,000. So, you will need to pay tax of Rs.10,000 –
Rs.5000 (deducted as TDS by your issuer), which comes to Rs.5000.
Now that you know how to plan your fixed deposit tax, go ahead and shop for FDs
offered by reputed issuers. Consider investing with NBFC like Bajaj Finance to
enjoy higher interest rates. When you invest in the
Bajaj Finance Fixed Deposit for at least 36 months, you can
earn as much as 8.75% as a regular investor and 9.10% as a senior citizen.
Additionally, you can also earn an additional interest of 0.25% on renewing an
FD. Also, Bajaj Finance offers FDs with both interest earnings at maturity and
frequent payouts to meet your requirements. So, start an FD by investing as low
as Rs.25,000 today and work towards securing your finances.
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