5 years Tax saving FD Benefits In 2020
FD is one of the best tax savings5 years tax saving FD is even better than normal FD.
FD VS 5 years Tax Saving FD
FD stands for fixed deposit.And every FD has a lock-in period (minimum 1 year and more),meaning that the amount you invest in the form of FD,you can draw after a fixed period.
Whereas 5 year tax saving FD has a strictly five year lock-in period.
Saving Benefit of tax saving FD
Also, The major benefit of tax saving FD is that we can take deduction up to ₹ 150,000 under 80C section.
Taxability On FD Interest
FD interest is totally taxable. As per tax slab rates,you have to pay tax for your FD interest.
Suppose your FD interest is ₹ 50,000.so this amount is your income which is taxable.
How To take Deduction Of Tax Saving FD
Let us suppose your gross income for FY 2019-20 is ₹ 7 lakhs.
Now suppose you don’t have any saving except your 5 year tax saving FD in SBI
That is of ₹ 150,000.
Let us calculate your tax :
7 lakhs – standard deduction of ₹ 50,000 – saving from 80C to 80U (150,000).
Thus total income becomes ₹ 5,00,000.
Finally there will be no tax if total income is ₹ 5 lakhs or less.
Also read : How to calculate income tax for FY 2019-20
It is clear from the above article that if you want to invest,5 year tax saving FD is a better option to choose.