How to Calculate TDs on Fixed Deposit Easily?

FD Investment

Banks and NBFCs deduct 10% of the interest income if it crosses the limit of Rs. 10,000 in a year. However, if you don’t provide your PAN Card details to the bank, a TDS of 20% will be deducted. 

The interest earned through FDs is taxable but if your income does not fall in any of the tax brackets, claim for TDS deduction by using Form 15G. If you are a senior citizen then you will have to submit Form 15H to claim a TDS deduction.

Senior citizens can avail TDS exemption according to the Section 194A if their net interest income is up to Rs. 50,000. However, if you are younger than 60, you can avail TDS exemption only if your yearly interest income is up to Rs. 40,000. For interest income of more than Rs. 5,00,000, an excess of 10% is deducted whereas if your annual interest income is over Rs. 10,00,000, an excess of 10% tax deduction is applicable. A TDS of 30% is applicable for NRIs.

Now let’s see how TDS is calculated on a fixed deposit:

Suppose that you have invested Rs. 3,00,000 for 3 years in a bank FD that is offering FD interest rate of 5%. Your yearly interest income from this FD will be Rs. 12,000. However, you don’t have to pay any TDS as your interest income is below Rs. 40,000. However, if you have 4 such FDs, your interest income will be Rs. 48,000. Therefore, a TDS of 10% i.e. Rs. 4,800 will be deducted from your interest income. If you don’t fall in any tax brackets, you can reclaim this deduction by submitting a 15G form. 

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You can also park your deposits in a tax saving fixed deposit as it allows you to claim a deduction up to Rs. 1,50,000 every year. However, premature withdrawals are not available with these FDs and you get to choose only 5 years as FD tenor.

It is quite clear that the interest rate determines the interest earnings. Therefore, it is natural for you to search for an FD scheme that offers a high interest rate. Bajaj Finance FD is providing a fixed deposit interest of up to 6.80% which is the highest in the market right now. If you are older than 60, the interest rate goes up to 7.05% as a 0.25% higher FD rate is guaranteed to senior citizens. Here are a few reasons for investing in Bajaj Finance FD:

Easy investment process

The easy online investment method and flexible tenor spanning from 12 to 60 months make the investment process seamless. Also, as the documentation and even deposit payment can be done online, there is no need to visit any branch office of Bajaj Finance for investing in FDs. 

Calculation of interest

Calculation of interest for determining the TDS applicable to your deposits is easy with Bajaj Finance FD. It is because an intuitive FD calculator is available on the official website of Bajaj Finance. This calculator not only determines the exact FD returns but also shows you the applicable interest rate as per your customer category. 

Calculating the interest payouts is also possible via this online tool as you only need to choose the interest payout frequency for it. With Bajaj Finance non-cumulative FDs, you get quarterly, yearly, annual, and bi-annual interest payouts. 

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Seamless withdrawals

You can withdraw your entire investment for managing a financial crisis if 3 months have passed by from the date on which you had deposited in Bajaj Finance FD. However, there is no such need as Bajaj Finance FD also provides a collateral-free loan against FDs. 

Also, it is safe to invest in Bajaj Finance FD as CRISIL and ICRA have recognised it as a safe investment option.

After understanding what is investment and what are its benefits, you must also understand the taxation rules associated with the interest income. With FDs, you need to pay a TDS of 10% if your interest income exceeds Rs. 40,000 (Rs. 50k if you are older than 60). For claiming a tax deduction of up to Rs. 1.5 lakhs every year, investing in tax saving FDs can be a good option.

However, the strict withdrawal rules and limited tenor options might not be quite appealing for some investors. Instead, you can invest in a high-paying FD like Bajaj Finance FD and earn high returns to beat inflation.

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