Investment Strategies: How can I save Tax on the Interest earned through Fixed Deposits?

Investment Strategies: How can I save Tax on the Interest earned through Fixed Deposits?

Fixed deposits are safe, stable and high-yielding investment options that can help you secure your future. However, tax can often dip into a significant margin of your returns from this scheme. However, you can reduce the tax on your fixed deposit returns in numerous ways.

Take a look at some investment strategies by which you can save tax on interest earned via fixed deposits.

  1. Submit Form 15H or 15G

To save tax, it is important to file your returns on a timely basis. This will give you an assessment of your income and the amount you need to save. Apart from this, filling and submitting Form 15H or Form 15G will deem you eligible to receive tax benefits on your FD returns if your income is lower than the Rs.2,50,000 mark.

These forms allow you to declare your income and submit it as a proof to claim a deduction on your FD interest for the financial year in which you file your taxes.

  1. Regulate your fixed deposit interest returns

It is important for you to time your fixed deposit correctly to ensure that the returns in any one particular financial year do not exceed the minimum amount, which is:

  • 10,000 for bank FDs for those below 60 years of age
  • 5,000 for company FDs for all
  • 50,000 for bank FDs belonging to senior citizens

Returns beyond the limits mentioned above will be taxed as per your tax bracket. So, since the financial year ends on 31st of March every year, it is a good idea to start your FD Investment towards the end of the calendar year.

September-October is the ideal time to begin your investment. You can choose Bajaj Finance Fixed Deposit to gain up to 8.20% on your savings.

  1. Take professional advice from a good chartered accountant

Chartered accountants are proficient in dealing with various taxation and accounting related matters. Visit a chartered accountant to gain an insight into your personal finances. Computing your annual income against the savings and investments you have already made, they will help deduce the correct investment strategy for you.

Take their advice on various tax-saving investment instruments to help achieve the correct asset mix to gain the maximum amount of tax benefits and exemptions. The biggest advantage of getting your assessment done through a CA is that you can plan and invest way ahead of the end of the financial year.

So, implement these practices and invest a sizeable amount in secured and risk-free investment schemes like FDs.

Also Check: Calculate Maturity with FD Calculator

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