What are tax-saving FDs?
FDs of this type are subject to Section 80C tax deduction. They have five-year lock-in periods and can only be withdrawn after that. A person who invests in these FDs can deduct up to Rs 1.5 lakh per financial year.
These fixed deposits earn taxable interest based on the investor’s tax bracket. These fixed deposits are low risk and earn guaranteed returns.
Rajkotupdates.News : Tax Saving PF FD And Insurance Tax Relief
Investments in tax-saving bank fixed deposits are popular choices for people who want to reduce their taxable income but don’t want to take on too much risk. Besides, tax-saving fixed deposits (FDs) are offered by all banks with a fixed interest rate and enable taxpayers to reduce income tax.
In addition, a tax saver FD invested up to Rs 1,50,000 per year qualifies for deduction from total gross income, reducing taxable income for the year.
Meanwhile, tax-saving FDs can be invested for up to five years, and interest is paid monthly, quarterly, half-yearly, or annually.
Latest update this week
Nirmala Sitharaman defended the proposal to reduce the interest rate paid on employee provident fund deposits this week. She explained that the EPFO Central Board would take this decision.
She also discussed the comparative interest rates offered by other schemes, such as Sukanya Samriddhi Yojana, Senior Citizen Saving Scheme, and Perpetual Protection Fund (PPF), as well as SBI’s 5-10 year, fixed deposits, which offer 5.5% interest rates.
Tax Exemption on Tax Savings FDs
Fixed deposits are excellent ways to cut taxes for salaried workers. It is an FD that can reduce tax by up to 1.5 lakh, and it is locked in for a period of five years. Moreover, the tax refund due at the maturity of a tax-saving FD is tax-deductible for salaried individuals.
Tax Exemption on EPF
EPF (Employees’ Provident Fund) is among the easiest ways for salaried employees to save on taxes. It also provides tax exemptions, is provided under the 80C, and is administered by the Central Board of Trustees.
In addition to this, it is essential to remember that the interest earned on your PF account is tax-free up to 2.5 lakhs per year. Therefore, this is the easiest way to build a retirement fund.
PF and FD tax savings and Insurance Tax Relief for 2022: With the beginning of the Income Tax Return (ITR), those earning a salary should also plan for tax reductions.
To sum up, since you can pay into your salary accounts if specific aspects of investing are taken into consideration, it is not only effective in reducing taxes but in preparing a reserve for retirement.