Whenever it comes down to investments, most people usually opt for Mutual Funds. They’re great for people with a high-risk appetite, and in turn, they can potentially provide them with high returns. However, what if you are investing to avail tax benefits? In that case, you need to explore the option of investing in Fixed Deposits.
By investing in a Fixed Deposit, you can avoid engaging with a volatile market. Your investment will be secure as it gradually, over the tenure, collects interest. While high stakes individuals may find the lower returns discouraging, taxpayers can reap the benefits of investing in a Tax Saver Fixed Deposit.
With features that secure your earnings with zero risks, you may be wondering about who is eligible to invest in Tax Saver Fixed Deposits. You need to be an Indian resident, individual or belong to Hindu United Families (HUF).
Still uncertain about investing in a Tax Saver Fixed Deposit? Take a look at these benefits.
When you invest in a Tax Saver Fixed Deposit, the amount you invest is exempt from tax-based deductions. However, TDS is applicable on the interest earned in a financial year, if the interest earned exceeds Rs. 10,000.
However, there are 5 ways you can prevent losing your interest to tax deductions.
Form 15G is a self-declaration form that you can submit to the bank, stating that you don’t possess any taxable income. This is applicable for those whose income falls under the basic exemption limit. Senior citizens can submit Form 15H to avail the same provision.
If you belong to Hindu United Families, then you can start a personal fixed deposit and another under the HUF account. These accounts will be treated as separate.
You can pre-plan your Fixed Deposit’s tenure in a way that it coincides within 2 financial years. However, ensure that your tenure crosses over 31st March when the financial year closes. By following this, you can split your interest between 2 financial years.
You need to submit your PAN card while investing in a Fixed Deposit. In case you don’t or forget to, the bank will deduct taxes at a higher rate.
Choose to invest your deposit in Fixed Deposits between different banks. This will make sure that neither of them acquires an interest that exceeds the amount of Rs. 10,000
Does all of this sound too good to be true? Fortunately, that’s not the case! Just follow the procedure of applying for Fixed Deposits, and start indulging in the secure and risk-free perks of Tax Saver Fixed Deposits.