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Use an FD calculator to simplify the process of declaring your FD interest income

  By : , New Delhi, India       2.5.2019         Phone:9716171569          Mail Now

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 wonít 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 kidís 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 donít 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 Ė 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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