Here’s why the FD calculator is so popular among investors; you can actually explore investment options and applicable taxes using a fixed deposit calculator.
If you have been investing your money in fixed deposits, you should know that if your fixed deposit interest is above a certain amount in a year, then it makes you liable for taxation.
This is under the Income Tax Act of 1961, according to the Income Tax slab you fall under; whoever says you are not liable is just giving out misleading information. Here’s how things stand under government regulations: if, in an annual year, the interest on your fixed deposit is beyond Rs. 10,000, you will have to pay tax upon such higher interest.
Don’t worry! You can explore your options with your bank for calculating the tax applicable to you, by using a fixed deposit calculator. You can use the FD calculator online to not only to calculate the tax that might be payable by you, but also know your tax liability in advance.
Here’s how you can use an online FD Calculator to help you set your finances and taxes right:
- Calculate your Tax Liability on the Fixed Deposit
When you are filing for your income tax refund in a financial year, you need to take into account the interest that accumulates on your fixed deposit.
This income would fall under “Income from other sources”. If you are a PAN (Permanent Account Number) holder and the bank has your PAN, then the TDS deducted on your interest would be at the rate of 10%. You can use Online FD Calculator to arrive at an accurate interest rate to estimate the TDS that would be deductible.
Your bank would deduct the TDS if your interest is more than Rs. 10,000/- in a given financial year as per the tax slab.
- You can Pay Advance Tax Too!
Instead of finding ways to circumvent the payable tax, you can actually opt for paying off Advance Tax Liability.
This means that, if your taxable income is above Rs. 10,000/- in a financial year, you can either choose to pay the tax during the year in the form of instalments. It is known as payment of Advance Tax which you pay as you earn. Use a Fixed Deposit Calculator to estimate the instalments that you can pay off timely for a good financial practice.
- When do you Have to pay TDS on the Fixed Deposit Interest?
As mentioned previously, when the interest on your fixed deposit in a given year goes beyond Rs. 10,000/-, you accrue tax liability under the Indian laws.
Also if your bank has details of your PAN, your TDS is deducted at a lower rate of 10% vis-a-vis of 20% in case of absence of your details. The TDS will be deducted by the bank only when your interest crosses the Rs. 10,000 threshold. So if you believe that your TDS has been wrongly deducted by the bank, you can file Form 15G with the bank claiming that your income will not fall under the taxable income slab.
You can determine your Tax Liability in advance when you use a Fixed Deposit Calculator and keep your abreast of all or any deductions that you may be subject to.
Conclusively, if you make the best use of the online calculators, your finances would be organised. What’s more, you wouldn’t be subject to unnecessary or hidden deductions.