Blog

FD INCOME IS THE BEST OPTION OR NOT?

While we are doing tax audits, accounting and tax planning we have noticed the following points for those who have income from FD.

FDs are one of the best investment options. They offer steady income in the form of interest, dividends or any other form you can think of and also give you the flexibility to withdraw your money whenever you want.

While interest earned from bank fixed deposits is fully taxable for individuals, senior citizens can claim a deduction of up to ₹50,000 on interest on savings and fixed deposits.

But

1) If you fall in the 30% bracket, you will have to pay tax at 30% on the FD income. Let's say you have an FD income of Rs 1 lakh per annum, you will have to pay more than Rs 30,000 thousand in tax from it

2) If you are a professional and your income is above 5 lakh then you should switch to other higher-rate investments than FD.

3) Basically there are some taxpayers who have no other income other than FD then FD is the right option for them

4) FD interest rate is 6% in banks and 9 to 11% in credit unions but after 30% tax amount net income is 4. 20 banks and 7% credit remain

5) FD income may turn out to be loss considering the rising inflation every year on year

Regards

Santosh Patil

ICA & MBA

Founder:- Alliance Tax Experts

#alliancetaxexperts #incometax #scrutiny #tax #gst #audit #taxconsultant #taxprofessionals #incometaxdepartment #notice #taxplanning #fdincome #navimumbai