Income tax on cumulative FD.

Aditi

I have a huge home loan on me. And my job is the only source of income. To secure my future, I want to keep some money aside. So I'm planning to open cumulative FDs with 1lakh. That is 15 lakh that I intend to save aside. Thus,15 FD's

If I break those FDs in 2033, upon maturity, would the entire interest earned in that year or each year be subject to taxation? My income tax bracket fluctuates. Currently, it is 15%. Next year, it might be 25%.

Please advice. I know the bank deducts 10% of TDS. But when will they deduct that? In 2032 or now?

Reema

FDs are safe, but you need to diversify your investment to get better returns and risk management. With FDs your can secure your future and it’s a good idea. To understand the FD Taxation and Planning, you need to understand these points:

If your total FD interest exceeds to Rs.40,000 then bank will deduct 10% TDS annually.
There is a a procedure of taxation on maturity of your FD.
Your annual tax liability may vary. So its better to do some -tax saving investments like PPF and ELSS.