Sunday, November 12

# Use FD Calculator Tool To Determine Tax Impact On Your Interest Income

Interest income from FDs is taxable in the hands of depositors under the head ‘income from other sources’. FD calculator Tool helps investors to know the estimated returns on their FD investments. Hence, they can plan their investments in such a way that taxes will be at a minimum value. Let’s discuss how this ready-to-use calculator works and helps investors to determine the tax impact.

# What is an FD calculator?

Fixed Deposit (FD) Calculator is an online tool offered by banks and NBFCs to calculate interest rate, interest amount, and total maturity amount to be accrued on an amount of money in an FD account. It is called an FD interest calculator or FD calculator. The tool calculates how much a depositor will earn on investing in an FD account using inputs like the depositing amount, lock-in period, and the interest rate for the chosen lock-in period.

# How to use FD calculators

FD calculator is a ready-to-use product in the financial market so, you can use it easily. To calculate your interest income on an FD:

• Choose Customer Type [Non-Senior Citizen (Investing Offline)/Non-Senior Citizen (Investing Online)/Senior Citizen(Investing Offline/Online)]
• Choose Investment Amount
• Choose Investment Tenor

Then you will automatically get the returns value in just a few seconds.

# Calculator Results

For example, if you are a senior citizen investing twenty lakhs for 3 years in December 2020. As per your above inputs, the calculator will show the following calculations for cumulative and non-cumulative FDs:

For Cumulative FD: Principal Amount: Rs. 20,00,000

 Interest rate 6.85% Interest payout Rs. 4,39,796 Maturity by Dec 2023 Maturity amount Rs. 24,39,796

For Non-cumulative FD: Principal Amount: Rs. 20,00,000.

 Period Interest rate Interest payout Monthly 6.64% 11,067 Quarterly 6.69% 33,450 Half-yearly 6.74% 67,400 Yearly 6.85% 1,37,000

As you see, the FD returns are based on the deposited amount, applicable interest rates on the said amount, and frequency of interest payouts as well. So, estimate your FD returns using FD calculator monthly interest tool and determine the tax impact on your interest income even before start depositing.

Hence, FD calculators help you to streamline your investments in such a way that you can maximize your returns and save taxes. Apart from high-interest rates, Bajaj Finance FD offers safety of your investment amount backed by credit ratings from reputed organizations such as ICRA and CRISIL.

# Taxation an Exemption on FD Interest Income

### Income tax liability

The interest income is added to the depositor’s income, and then his tax liability is determined under the applicable income tax slab. Let’s say your income tax slab after adding your interest from FD to your total income is 30% so, you are liable to calculate tax on the entire income @ 30%.

### TDS

Under section 80TTA/B, if the FD interest is more than Rs.40,000, you have to pay TDS @10% and this limit is Rs.50,000 for senior citizens. This limit is set for every branch and not an aggregate of a depositor’s all FDs with different branches of FD issuer. Wherever the interest income exceeds the maximum limit, TDS will be applicable in that particular branch only and not in the other issuer’s branch.

If an individual’s total income after adding interest income in an FY is less than Rs 2,50,000, which is the minimum taxable slab, he need not pay TDS.

The TDS on FD interest is calculated and deducted when it is due and not when it is paid. FD interest is transferred to you after deducting TDS.

If your income is non-taxable, then you need to submit form 15G/H at the beginning of every FY. In case you could not submit these forms and the FD issuer has deducted the TDS, you can claim a refund.

### The Bottom Line

FD calculator is a great way to strategize your investments to minimize the impact of income tax on your returns. Post Office FD plans are different from banks and NBFCs so better to visit the individual website of each financial institution for more clarity about interest rates.