The first step in assessing your tax dues is to arrive at your taxable income. If fixed deposits are part of your investment portfolio then you need to compute the interest earned on your FDs as it are taxable according to your slab. Determining your returns can be tedious because of the complex mathematical formulae involved and if left to pen and paper, you may find yourself with erroneous results. To avoid this, use an FD calculator.
By simply feeding in basic FD details you can view your interest earned in an instant. Once you have this figure, add it to your taxable income, determine your tax bracket, and compute the tax you need to pay on your interest. Let’s understand this process with a few examples.
Calculations for FY 18-19
Let’s say you earn Rs.4.25 lakhs annually and have invested Rs.75,000 in an FD that gives you 8% interest every year.
If you feed the FD parameter details in an Fixed deposit calculator, then you can see the amount of interest you will earn at the end of the year. Here this will be Rs.6,000.
- Your taxable income now will be, Rs.4,25,000 + Rs.6,000 = Rs.4,31,000.
- As per the Income Tax Act your income is taxable under the 5% tax slab. So, for FY 18-19 the gross tax you pay will amount to Rs.9,412 inclusive of your interest earnings for the year.
- In case you have a company FD then TDS will be paid to the government at the rate of 10% if your interest returns exceed Rs.5000 in one financial year. In the above case, your TDS will amount to Rs.600. So, if your TDS have been deducted in advance then at the time of paying taxes this amount will be balanced out.
Calculations for FY 19-20
The recently announced interim budget hasn’t changed the tax slabs, but has made way for tax rebates should you be eligible for exemptions under Section 87A.
Let’s assume you have an annual income of Rs.4.75 lakh and invest a sum of Rs.1 lakh in an FD that gives interest returns at the rate of 8.5% annually.
- If you fill in these basic figures into an FD calculator, you will get your interest accrued. In this case the interest will amount to Rs.8,500.
- To arrive at your taxable income, add this interest earning to your annual salary. Here it will become Rs.4,75,000 + Rs.8,500 = Rs.4,83,500.
- However, if the new income tax suggestions proposed during the budget are legalised then while filing income tax return for FY 19-20 you will get tax benefits on this income as it does not exceed Rs.5 lakh.
- Moreover, the budget proposals have suggested that interest returns of up to Rs.40,000 on bank and post office FDs will be exempt of TDS this financial year onwards.
Now that you know how easily you can calculate your tax liability on FD interest returns, use the Bajaj Finance FD calculator to make calculations easy. This calculator computes interest earned on a Bajaj Finance Fixed Deposit. Enter in details like principal amount, FD type, citizen bracket, and FD tenor and the calculator will generate the result quickly. The Bajaj Finance FD is an outstanding investment avenue as it offers you lucrative returns while keeping your investment safe. In fact, here you can get an FD interest rate of up to 9.10% if you are a senior citizen and a rate of up to 8.75% if you are a new customer. When it comes to security, this FD carries an ICRA rating of MAAA and a CRISIL rating of FAAA, which is the highest rating offered by both agencies respectively.
With the Bajaj Finance FD, you can manage your account online and even begin your investment with an easy online application form. Get started on earning assured returns today as you need just Rs.25,000 to start an FD!