Connect with us

News

10 Common Myths Surrounding Fixed Deposits and Earned Interest

Published

on

[ad_1]

Fixed Deposits, also called as Term Deposits, are one of the most traditional investing options. While we may be hearing a lot of noise around Mutual Fund SIPs, Liquid, Balanced and Debt Funds, Stock Picking, Tax Free Bonds, PPF, EPF etc, the fact of the matter is that nothing can beat the assurance and simplicity of a Fixed Deposit. Though tax inefficient and not the best returns provider, fixed deposits do deserve their own pie in your portfolio. Tell me whether there is any other investment option you know which is as simple, assured, liquid, monitoring free and risk free – all rolled in one – as a Fixed Deposit? There is actually none. It does come at a price of tax inefficiency and slightly lower returns, but in quite many cases – returns may not be the only criteria to decide on your investments.

So, if you have started to feel happy that all that chunk of Fixed Deposits lying almost unattended in your bank accounts is now justified, let me throw a word of caution here. Your Fixed Deposit is earning interest. Bank may be deducting some tax as well (TDS). But you may be liable for more tax. And if you have not been paying that, you might be in for deep trouble. Yes, at the time of filing your Income Tax Returns, you are liable to calculate the additional tax that you need to pay from your Fixed Deposit interest – and then pay it as well. This may be completely over and above the TDS that the banks may have deducted. If you have been ignoring that, then I am sure you also understand that ignorance of law is never an excuse. Inefficiently managed interest accrued from your Bank Fixed Deposits can actually land in you in deep trouble with the taxman.

Let us remove some of the common myths surrounding the Fixed Deposits and the interest accrued out of them:

Myth 1

Fixed Deposit interest is hidden from the taxman

Fact 1

All Banks report the interest accrued against your PAN Number to the IT Department. So, gone are those days when banks and their branches were disconnected. Today, in this interconnected world of PAN and Adhaar, there is no way you can escape from the prying eyes of the taxman.

Myth 2

Bank has already deducted TDS – so, you don’t need to pay any more tax

Fact 2

Banks deduct only 10% of the interest earned as TDS, or 20% if you have not provided the PAN Number to the bank. But you may actually be liable for more. It all depends on your total income in the financial year. If you fall in the 30% tax bracket, then you are liable to pay 30% tax on the interest earned from fixed deposits – after adjusting for 10% or 20% TDS that may already have been deducted by the bank. If you are in the 20% tax bracket, and the bank has deducted only 10% TDS, then you are liable to pay another 10% tax on the interest that you have earned.

Myth 3

You have submitted Form 15G/H – so there is no tax liability

Fact 3

Form 15G/H has a very specific purpose wherein you are confirming to the bank that you are not likely to fall even in the 10% tax bracket in the current financial year – and hence you are requesting the bank not to deduct TDS. But if that does not turn out to be true by the end of the financial year, you got to pay tax as per the tax slab you fall in.

Myth 4

Your interest is less than Rs 10,000 in a financial year and thus there is no tax liability

Fact 4

Even INR 1 interest earned from Fixed Deposits is liable to be taxed, unless of course you fall in 0% tax slab. This exemption of Rs. 10,000 is not applicable on Fixed Deposit interest. This exemption is only available for interest earned out of the money idling in your savings account. So, you are liable to be taxed even if your interest income is less than INR 10,000. The only benefit you have is that the bank will not deduct any TDS till the interest crossed INR 10,000. Even if that is the case, you will need to pay the applicable tax at the time of filing ITR.

Myth 5

I have a recurring deposit. Interest is not taxable here

Fact 5

100% incorrect. Whether it is FD or RD, every single rupee of interest earned is taxable as per your current tax slab

Myth 6

I have invested in a 5 year Tax Free FD. It will not be taxed now

Fact 6

Quite contrasting to their name, Tax Free FDs are actually NOT tax free. Yes, they don’t help you save tax from your interest income earned out of the fixed deposit. They do help you save tax by showing the principal investment under Section 80C, just like you may save tax by showing EPF or PPF investment under Section 80C. However, every single rupee of interest is taxable as in any normal fixed deposit.

Myth 7

National Savings Certificates (NSC) or Kisan Vikas Patras (KVP) are tax free

Fact 7

Again, none of this is true, and every single rupee of interest is taxable as in any normal fixed deposit.

Myth 8

Senior Citizen Deposit Scheme is Tax Free

Fact 8

Again, none of this is true, and every single rupee of interest is taxable as in any normal fixed deposit.

Myth 9

I have invested in an FD in my wife’s name. So, I am saved of any taxes.

Fact 9

Money gifted to a spouse does not attract tax. But if that money is invested, the income it generates is clubbed with the income of the giver and taxed accordingly. If a husband has invested in fixed deposits in the name of his wife, the interest will be taxed as his income. So, better avoid wasting your time and effort.

Myth 10

I have invested in my child’s name. So, I am saved of any taxes.

Fact 10

Money gifted to a child does not attract tax. But if that money is invested I the name of aa minor child, the income it generates is clubbed with the income of the giver and taxed accordingly. If a father has invested in fixed deposits in the name of his minor child, the interest will be taxed as his income. So, better avoid wasting your time and effort. In case of children though, there is a small exemption of Rs 1,500 per year per child for a maximum of two children.

Calculate the Tax payable on FD interest

1. Calculate your total interest income from all the Fixed deposits in a financial year. Say, it is INR 50,000

2. Find your tax slab (based on your total income – which includes all sources of income, including FDs). Say, it is 20%

3. Based on 1 and 2 above, calculate the tax payable on FD interest. It will be 20% of 50,000 = INR 10,000

4. Check Form 26AS to see the TDS already deducted. Assuming it was deducted at the standard rate of 10%, it will be INR 5,000

5. Additional Tax payable at the time of filing ITR = INR 10,000 (as per 3) – INR 5,000 (as per 4) = INR 5,000

How do I file Tax for interest income?

Report the total interest as “Income from other Sources”

In the ITR form, it will be added to your total income and will be taxed according to the tax slab you will fall into.

Avoid trying to be smart with the IT Department

In today’s interconnected banking system, avoid the following, play safe and live a peaceful life:

1. Do not try to submit Form 15G/H just to avoid TDS. Giving a false declaration can be considered a very serious offence – which could even lead to jail up to 2 years. This information makes its way to the Form 26AS of the individual. One can only imagine what will happen to an investor whose Form 26AS indicates submission of Form 15G or 15H at multiple banks and an income that exceeds the basic exemption limit. In any case, even if you are able to avoid TDS by the bank, you are liable to calculate and pay the total tax while filing ITR. Playing such games is just not worth the effort.

2. Do not waste your time and energy splitting your bank FDs across multiple banks or branches. Every account is connected through your PAN number.

3. Avoid trying to save tax by investing in the name of your spouse or minor children. There is a clubbed income provision which leads to all the interest earned by your spouse or child to be clubbed with your income and taxed accordingly. In some cases, it might help investing in the name of your parents, because the clubbing provision does not apply there. However, just ensure that the parents income and tax liability should not go up because of that.

Having a clear understanding of Fixed Deposits and tax liability arising out of the interest income from the same will keep this investment option the way it was designed – simple, guaranteed, liquid, monitoring free and risk free. You will be able to enjoy its true charm then!

[ad_2]

Source by Manoj Arora

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

iPhone Application Development – Earn Money Through iPhone App Store

Published

on

[ad_1]

The Internet Revolution! I’m sure you read and heard a lot about it and so I won’t list the myriad ways in which it has changed everything. Professionals capable of working independently and creatively have benefited the most from the ubiquity of the internet.

There are so many ways I which you can showcase your talent to the world (or hawk your wares): you can write a novella, self-publish it over Amazon, and if people like it, you will mint money; you can post a funny video over YouTube (or start you own ‘Channel’), and using nothing more than your skills and ingenuity, find fame and fortune; or you can use your iPhone application development skills, sell your app(s) in the Apple App Store, and buy that yacht you’d always wanted!

Over 2 billion apps are downloaded from the iPhone App Store every year, and as the sales of iPhones continues to rise and more people start using iPhone, the demand for iPhone apps will increase. iPhone apps are constantly making the news and they are one of the prime reasons for the success of iPhones. Experts predicts that 3G smartphones which offer all the facilities of internet will replace PCs and laptops, and apps are the things that make it easier for the users to use their smartphones in lieu of computers: the market for apps is huge, and it will only grow further over time.

Do you have creativity, talent and innovative ideas? There are school students out there who are making serious money developing iPhone apps and selling them using the iPhone app store. Do you think you have the app idea of the decade? You don’t necessarily have to have a scientific and technical mind to gain success at iPhone application development: all you need is an idea and the ability to transform it into reality.

The best thing is that there are a number of free tutorials and SDKs available on the Internet; you can use download them for free and learn how to develop apps for iPhone apps. You might need t invest some time to study how to develop the best apps, and then how to market them over the net, but thereafter your creative ideas will take you far.

Even if you are not good at logic and math and programming is just not for you, you can still take help from professionals and pay iPhone developers to develop an app based on your idea. If your idea is really good, you could convince them to work for royalty from the sales of the app. And if your idea is really good and you are sure that the app based on your idea is going to sell like hot cakes, its best to pay the developer upfront and have complete control over all the profits on your iPhone app!

Once the app is ready, you just need to follow the simple guidelines on the iPhone app development store and list your app on the list of available apps. But there are millions of apps on the iPhone app store, and so you will need to do things to get publicity for your apps: get a website in the name of the app, try and make someone do a piece about in a magazine, keep your fingers crossed, and wait for the world to wake up to the proof of your genius!

[ad_2]

Source by Vatsal M

Continue Reading

News

What Can I Use Bitcoins For?

Published

on

[ad_1]

Practically, almost any product or service that can be bought with dollars or other currencies can also be bought with bitcoins. On the other hand, the high volatility of bitcoins is a huge risk for some people that might want to use this cryptocurrency, but they are afraid about price differences. Even so, the characteristics of bitcoins make them perfect for internet payments:

1. Fast transactions

A bitcoin transaction is processed in 10-15 minutes. In case of a bank transfer, it might take hours or even days for the money to get from one account to the other. Some might say that PayPal or other ewallets are even faster. It is true, but there are other aspects that ewallets can’t give: privacy and smaller commissions.

2. Privacy

When you send bitcoins to a partner over the internet, the transaction will be registered in a blockchain. The list of transactions is public, and it can be verified on specialized websites. Only the identification number, the sum and the time are recorded. There is no way for somebody to find out from where the bitcoins come, and where they go. This is characteristic of bitcoins attracted many people. Well, some of those are interested about it because they can buy illegal goods with those, but the majority of bitcoin users are people that want to buy legal items and services, but which don’t want to disclose their identity. Porn and gambling websites might be immoral, but they are not illegal, so people that want to subscribe for those services can safely pay in bitcoins on the websites that accept this currency, knowing that their reputation will not be affected.

3. Smaller commissions

The average commission is 0.002 BTC for a transaction. It is significantly smaller compared with the PayPal or banking commissions. Moreover, you are not even obliged to pay it. By paying a commission, you “reserve” the computational power of a pool (or at least a part of it), to process your transaction faster. You even have the possibility not to pay the commission. In this case, you might need to wait two or even three days for your transaction to be processed. If you are not in a hurry, this might be the perfect opportunity to make money transactions with zero costs.

Of course, there are also disadvantages for using bitcoins, such as the possibility to lose them. If somebody steals your bitcoins, or if you delete the wallet files, it is impossible to recover those. As long as the bitcoin is not regulated, there is no central organism for arbitrage between divergent parts. In other words, you can’t complain if you lose or you are robbed by your bitcoins, simply because there is nobody to complain to.

[ad_2]

Source by Stanculescu Mihai Bogdan

Continue Reading

News

Things You Should Know About Bitcoin Black

Published

on

[ad_1]

What is Bitcoin Black?

Bitcoin Black is basically the cryptocurrency of the people, by the people for the people. It will be adopted for use as a peer 2 peer payment system which gives the power back to the people.

If we talk about Bitcoin, Bitcoin has failed at this, real value comes from real use of the ecosystem and empowering people. Bitcoin transactions are slow and expensive, and it can be said that Bitcoin is somewhat centralized. Bitcoin takes power of people because it is heavily manipulated and through cycles that discourage participants from cryptocurrency in general.

People buy bitcoin to get rich, not to be involved in the ecosystem. The one percent elite takes advantage of bitcoin and creates discouragement, strategically increasing the price and attracting entry for the dream of wealth and dumping coins for their benefit. In fear of adoption. Bitcoin is completely controlled, pumped and manipulated at will, for many different reasons.

Bitcoin Black is focusing on solving these problems as the coin is a cryptocurrency with a fair distribution Airdropped to 1 Million wallets prior to IEO which all funds will go to community groups voted by the community to move the project forward with focus on fair distribution, mass adoption, usability, education, ease of access, simplicity and community.

The goal is to make it a real decentralized autonomous network giving back power to the people. He does not belong to a group, but belongs to many branches of the community.

Distribution of Coins

Bitcoin Black is aim to have airdrop to at least 1 million wallets initially with not more than 0.5% of supply owned by 1 founding member making it truly decentralized cryptocurrency.

The project have a pre-sale of 2.5% of total supply which is almost 900 Million coins.

If we take a take a look at the IEO, 7.2 billion IEO coins will be allocated to several community foundations that will help the community move the project forward in the future.

Counterpart funds for manipulation (around 5%). Part used for the stability control fund to eliminate the possibility of early manipulation at low volume and maintain currency stability.

Finally, the rewards for introducing the application will be 14.4 billion coins.

Introduction of 30 million members with an increase in the rate of new users. A method of bringing the coin into every schoolyard / university / workplace and community.

Total Supply

A maximum supply is 36 billion coins.

Rewards

3.6 billion coins to be claimed by members who help share Airdrop.

Simple social sharing platform in one click. Share a social message that provides an introduction to encrypted video and the app download link that will allow your friends to download it. Currently the platform is active and functioning well.

Innovation

The best innovation is the Fee free transactions. You can send bitcoin black to anyone free of charge. The transactions are Instant and you can send money as easily as sending an message.

The wallets are easily accessible and very simple to use.

Conclusion

Bitcoin black have a fair mass distributed currency with supply spread widely that it will create less volatility by synchronized pumps and dumps and lead to a more stable price. Bitcoin black is going to be the next bitcoin. You can register for the airdrop by clicking here. I wish someone back in 2008 would have included me on the Bitcoin airdrop. Bitcoin Black will be life changing and we want to tell this to as many as possible.

[ad_2]

Source by Mark West

Continue Reading

Trending