The current government presented the much-awaited Interim Budget on February 1, 2019, amid several speculations. While this was an Interim Budget, there were certain aspects that could be very profitable for the common man. The budget indicated greater focus on the needs of the middle-class and farmers, which would encourage steady economic growth for the nation.
Amid the announcements made, one of the admirable changes was the increase in TDS exemption on FDs. Read on to find out more about this change and understand how you can make the most of this as a fixed deposit investor.
Increase In TDS Exemption
Previously, the interest income on your post office fixed deposit and your bank fixed deposit was taxed through TDS (tax deducted at source) when it exceeded the amount of Rs. 10,000 per year. While this seemed like a high amount, the limit was inclusive of all your fixed deposits. This made it difficult to gain from fixed deposits as you would need to part with your earnings. However, the Interim Budget has heightened the exemption threshold to Rs. 40,000. Thus, you do not need to compromise on your earnings especially when you choose fixed deposits by banks and post offices that offer lower interest rates as compared to NBFCs to begin with.
Increase In Basic Income Exemption
The interest gained from fixed deposit is added to your total income for the year and taxed accordingly. This means you are liable to pay taxes once you have crossed the basic income exemption. This basic threshold was previously Rs. 2.5 lakh, however, as per the Interim Budget the amount has been doubled and is now Rs. 5 lakh. With this, you can earn generous returns; more so if you submit Form 15G/15H.
The Use Of Section 80C Further Decreases Tax Liability
As always, Section 80C can be used to decrease your tax liability if your overall income for the year exceeds Rs. 5 lakh. So, if your income is slightly over the Rs. 5 lakh limit, you need not worry as you can always claim deductions under Section 80C, up to Rs. 1.5 lakh. As per this year’s Interim Budget, if your income is over Rs. 5 lakh and you invest in the right instruments, you can make Rs. 6.5 lakh tax-free.
In order to make the most of these Budget announcements, ensure you are investing with a top issuer that offers you maximum returns and convenience. Some issuers may offer add-on features too. For instance, the Bajaj Finance yields fixed deposit interest rate up to 8.75% on a cumulative FD for 36 months. If you are a senior citizen, you can gain up to 9.10% with the same scheme.
Further, a special tenor scheme of 15 months and renewal of your FD results in 0.25% additional interest. Best of all, the Bajaj Finance FD has ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating which means your investment is never at risk. Apply easily for a Bajaj Finance FD and manage your investment online from the comfort of your armchair.