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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.

 tax saving FD

5 years tax saving FD Benefits

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

Summary

It is clear from the above article that if you want to invest,5 year tax saving FD is a better option to choose.

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

Click Here to Leave a Comment Below 2 comments
Ashok - January 29, 2020

What is limit for tax saving FD??
How much maximum money we can invest in tax saving FD ?

Reply
    Kuldeep Singh - January 30, 2020

    You can take rs. 150,000 for 5 year tax saving FD under sec.80c

    Reply

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