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Moneywize |107 Answers |Ask -Follow

Financial Planner - Answered on May 02, 2024

MoneyWize helps you make smart investment choices.... more

Asked by Anonymous - Apr 20, 2024Hindi

Money

I have submitted my Form 15 to my bank in April 2023. My income falls under the non-taxable category against interest received from bank FDs. Bank has not deducted any TDS up to September 2023 but from October 2023 they have started deducting TDS on FD interest earned by me saying that interest earned on my FDs have crossed the limit of Rs 5 lakh. Is the bank right in deducting tax citing this reason? Please enlighten me.

Ans: No, the bank is likely not right in this case. Here's why:

• Form 15G validity: A valid Form 15G submitted before April 1, 2023 is applicable for the entire financial year 2023-24 (assessment year 2024-25). This means if your income falls under the non-taxable category, the bank shouldn't deduct TDS on your FD interest for the entire year.
• TDS exemption limit: The current exemption limit for TDS on FD interest is Rs 40,000 for individuals below 60 years old, and Rs 50,000 for senior citizens (above 60 years old). There's no limit of Rs 5 lakh for TDS deduction on FD interest.

Here's what you can do:

• Reach out to your bank: Inform them that you submitted a valid Form 15G and your income falls under the non-taxable category. You can clarify the exemption limit and point out the mistake.
• Request rectification: Ask the bank to rectify the error and reverse the TDS deducted on your FD interest from October 2023 onwards.
• Seek professional help: If the bank doesn't resolve the issue, consider seeking help from a tax consultant or financial advisor. They can guide you further on how to claim a refund for the deducted TDS.

Additional points to consider:

• Ensure you have a copy of the Form 15G submission acknowledgement for your records.
• Keep a record of any communication with the bank regarding the TDS deduction.

By following these steps, you should be able to resolve the issue with the bank and avoid unnecessary TDS deduction on your FD interest.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Question by Amalendu - Nov 08, 2022Hindi

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I am 82-year-old lady. In spite of submitting Form 15H in the beginning of financial year, i.e. in the first week of April, SBI is still making TDS deductions from my account. Received no reply on my complaint. I have interest from FD and Senior Citizen Savings Scheme and no other earning. Is there any limit to interest amount with Form 15H?

Ans: Form 15H is for the declaration that no TDS is required to be deducted on interest income, as tax liabilities on total income earned is zero. So if Interest Income is above Rs 5 lakh (which is the minimum exemption limit for super senior citizens), Income is likely to be taxed and TDS is required to be deducted by payer of Interest.

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Tax, Mutual Fund Expert - Answered on Jul 27, 2023

Question by SHEKHAR - Jul 09, 2023Hindi

Money

My pension bank has shown interest earned Rs. 80000/-for the financial year 2022-23. But no such interest was credited to my account during this period. I asked the bank manager to correct it as i have to file income tax return for Financial Year 2022-23. But the bank manager said the amount is that will accrue on maturity of FDs made by me{ i.e. for ull period of FDs}. I said I will pay tax on it on maturity of FDs. But he said, it is to be paid this year ( starting of FD period) on total interest to be earned for the FD period, I am confused. Kindly help to know the correct position.

Ans: Dear Shekhar,

I understand your confusion. Let me clarify this for you.

The interest earned on Fixed Deposits (FDs) is fully taxable. It is added to your total income and taxed at the slab rates applicable to your total income. The bank deducts TDS (Tax Deducted at Source) on the interest earned if it exceeds â‚¹40,000 in a fiscal year (the limit is â‚¹50,000 for senior citizens).

Now, coming to your specific situation, the bank is following an accrual system where the interest is calculated and accounted for each year, even if it is not paid out. This is why the bank has shown the interest in your account, even though it has not been credited to your account.

The bank manager is correct in saying that the tax is to be paid in the year the interest is accrued, not when it is actually received. So, you will have to include this interest income while filing your tax return for the Financial Year 2022-23.

I hope this clears up your confusion.

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Tax, Mutual Fund Expert - Answered on Jul 26, 2023

Asked by Anonymous - Jul 26, 2023Hindi

Money

My interest on FD has been taxed at 10% TDS already . Why does it have to be taxed again during the return filing . Example of interest is 2 lakhs and TDS is 20000.

Ans: Hello there,

I understand your concern about the double taxation on your Fixed Deposit (FD) interest. Let me clarify this for you.

The Tax Deducted at Source (TDS) is a means of collecting income tax in India and is governed under the Indian Income Tax Act of 1961. When it comes to FDs, banks deduct TDS when your interest income exceeds a certain threshold in a financial year. As of now, this limit is Rs. 40,000 for non-senior citizens and Rs. 50,000 for senior citizens.

Now, coming to your question, the TDS deducted by the bank is not the final tax. It's just a part of the total income tax you're liable to pay for the year. The bank deducts TDS at 10% (if PAN is provided) on the interest earned, but your final tax liability could be at 5%, 20%, or 30% depending on your total income for the year.

So, when you file your Income Tax Return (ITR), you need to add the interest income from the FD to your total income for the year. The tax on this total income is then calculated based on the income tax slabs. If the total tax calculated is more than the TDS already deducted, you'll have to pay the difference. Conversely, if the total tax is less than the TDS, you can claim a refund.

For example, in your case, if your total income including the FD interest falls under the 30% tax bracket, you'll need to pay an additional 20% tax on the FD interest (30% total tax minus 10% TDS already deducted).

I hope this clarifies your doubt. Please consult with a tax advisor or chartered accountant for personalized advice based on your total income and tax slab.

Best regards.

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Tax, Mutual Fund Expert - Answered on Jul 29, 2023

Question by AMIT - Jul 27, 2023Hindi

Money

Good Day Sir Parikh Sir, I am 47 years old and I am having FDR in three / four banks on which presently no TDS is being deducted by the banks as the interest income is under Rs.40000/- in each bank. I want to get the TDS deducted @ 10% by the bank on my FDR income even if the interest amount is below Rs.40000/- The banks are mentioning that the Computer system does not deduct TDS below Rs.40K. Sir, can you guide any Rules / Procedure so that the banks may be intimated through a letter to deduct at least 10% TDS on my FDR income. This will help me for not depositing TDS from my Saving account and the same is deducted from the interest income earned on FDRs. Kindly guide how can I get my TDS deducted on FDRs below certain exemption limit as per Govt. policy

Ans: Hello Amit,

I understand your concern and it's great to see your proactive approach towards tax compliance.

As per the Income Tax Act, banks are required to deduct TDS on interest income when it exceeds Rs. 40,000 in a financial year (Rs. 50,000 for senior citizens). This is an automated process and banks follow this rule strictly.

However, if you wish to have TDS deducted even when your interest income is below Rs. 40,000, you may not be able to do so through the bank directly as their systems are designed to comply with the existing tax laws and automatically deduct TDS only when the interest income crosses the specified threshold.

That being said, you can still manage your tax liability effectively. You can calculate the tax on your interest income and pay it as Self Assessment Tax or Advance Tax, as applicable, through the Income Tax Department's e-payment facility. This way, you can ensure that your tax payment obligations are met in a timely manner.

Please consult with a tax advisor or chartered accountant for personalized advice based on your specific circumstances.

I hope this information is helpful.

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Ans: MSc in Organic Chemistry, offers opportunities to apply your skills in diverse fields. Networking with professionals, attending industry conferences, and staying updated with the latest research and technological advancements can further enhance your career prospects. Host of options include: In the pharmaceutical industry, you can work as a research scientist, quality control/assurance specialist, or formulation scientist. The chemical industry offers roles such as production chemist, process development scientist, and analytical chemist. Academia and research positions include becoming a lecturer.
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Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

Asked by Anonymous - May 12, 2024Hindi

Money

A friend of mine is aged 47 yrs is a salaried income is 1 lakh p m at present, he is away from his hometown and living in a good city in india with his family,he was having a 2bhk flat whick he has purchased in his hometown, against which he took a loan from someone fir 14 lakhs to repay his debt since 10 yrs ago,still the outstanding is 14 lakhs, in 2024 he will get some funds 4 lakhs approx ,what he must do in this situation, should he take back the property by paying slowly all the 14 lakhs in coming years ,or he will just leave the property and with his own money look for taking a new property, the old flat is in 4th floor not having lift.He is scared about the present property cost and how will he be building a new house in his hometown..kindly advise

Ans: Navigating Property Ownership: Assessing Options for Financial Security
Your friend's situation presents a complex decision regarding property ownership and financial stability. Let's evaluate the available options and recommend a course of action that aligns with his long-term financial goals and current circumstances.

Understanding the Current Situation
Property Ownership: Your friend owns a 2BHK flat in his hometown, which he purchased 10 years ago with a loan of 14 lakhs. Despite regular repayments, the outstanding amount remains the same.

Financial Constraints: With a monthly income of 1 lakh and family responsibilities, managing additional financial burdens can be challenging, especially considering the stagnant loan amount and potential property maintenance costs.

Evaluating Options
Repaying the Loan: Your friend can consider gradually repaying the remaining loan amount of 14 lakhs from the funds he expects to receive in 2024. This approach allows him to regain full ownership of the property, eliminating debt obligations.

Selling or Abandoning the Property: Given the property's location on the 4th floor without a lift and the uncertainty surrounding its market value, your friend may contemplate selling or abandoning the property altogether. This option frees him from loan liabilities and potential maintenance expenses but necessitates finding alternative housing solutions.

Exploring New Property Investment: With the funds received in 2024, your friend could explore investing in a new property that better suits his current needs and preferences. However, the feasibility of this option depends on various factors such as property costs, location, and financial constraints.

Considerations for Decision-Making
Financial Stability: Prioritize your friend's financial stability and ability to manage debt obligations and future expenses effectively.

Long-Term Goals: Consider your friend's long-term goals, including retirement planning, family needs, and property ownership preferences, when making decisions about property ownership.

Market Analysis: Assess the current real estate market trends in your friend's hometown to gauge the potential returns on investment and property appreciation prospects.

Seeking Professional Guidance
Encourage your friend to consult with a financial advisor or real estate expert to assess his options comprehensively and make informed decisions aligned with his financial objectives and circumstances.

Conclusion
Your friend's decision regarding the 2BHK flat ownership requires careful consideration of various factors, including financial stability, long-term goals, and market dynamics. By weighing the available options and seeking professional guidance, he can navigate this situation effectively and secure his financial future.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

Asked by Anonymous - May 13, 2024Hindi

Money

Hi, I am currently 24 years old am earning around 11lpa I am investing around 60k each month (5k sip) rest lumpsum. What should be my investing strategy to get corpus of 10cr, I want to retire within 50 years. I already hv invest around 8.1l

Ans: Crafting Your Path to a 10 Crore Corpus: A Long-Term Investment Strategy
Your proactive approach towards investing at a young age and setting ambitious financial goals demonstrates foresight and determination. Let's outline a comprehensive investment strategy tailored to your objective of accumulating a 10 crore corpus by retirement within 50 years.

Current Financial Landscape
Young Age Advantage: Starting your investment journey at 24 provides a significant advantage due to the power of compounding over an extended period.

Steady Income and Investments: Earning 11 lakhs per annum and allocating 60k monthly towards investments, including SIPs and lump sum contributions, reflects disciplined financial planning.

Long-Term Investment Strategy
Equity-Centric Approach: Given your long investment horizon and goal of wealth accumulation, adopting an equity-centric approach is prudent. Equity investments offer higher growth potential over the long term, albeit with higher volatility.

SIPs for Regular Investing: Continue with your SIPs, as they foster disciplined investing and provide the benefit of rupee cost averaging. Allocate a significant portion of your monthly investments towards equity SIPs to capitalize on market opportunities and mitigate risk.

Lump Sum Investments for Portfolio Boost: Utilize lump sum investments to bolster your portfolio and seize attractive investment opportunities. Consider diversified equity mutual funds or blue-chip stocks with strong growth potential and track record.

Diversification Across Asset Classes: While equity forms the cornerstone of your investment strategy, consider diversifying across other asset classes such as debt, real estate investment trusts (REITs), or gold to mitigate risk and enhance overall portfolio stability.

Monitoring and Adjustments
Regular Portfolio Review: Periodically review your investment portfolio to ensure it remains aligned with your financial goals, risk tolerance, and market conditions. Make adjustments as necessary to capitalize on emerging opportunities or rebalance your portfolio.

Stay Informed and Educated: Keep abreast of economic developments, market trends, and investment strategies to make informed decisions. Continuous learning and staying informed are essential pillars of successful long-term investing.

Conclusion
With a disciplined investment approach, focus on equity investments, and commitment to long-term financial planning, you can work towards achieving your goal of accumulating a 10 crore corpus by retirement within 50 years. Stay disciplined, stay focused, and trust in the power of compounding to realize your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ramalingam Kalirajan |2424 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

Asked by Anonymous - May 13, 2024Hindi

Money

I have a current corpus of 2.25 cr. I am 46 yo working having my own business. My yearly SIP is 40 lacs. I have no loan. I want to retire at the age of 65 years. How much corpus will i'll be able to achieve with same SIP taking inflation and 10 to 12% return ?

Ans: Estimating Future Corpus: Projecting Retirement Savings Growth
Your proactive approach towards retirement planning, coupled with a substantial current corpus and significant yearly SIP contributions, sets a strong foundation for achieving your retirement goals. Let's project the potential corpus you could accumulate by the age of 65, considering inflation and expected returns.

Current Financial Situation
Substantial Current Corpus: Your existing corpus of 2.25 crores provides a solid base for wealth accumulation, demonstrating prudent financial management and planning.

Significant Yearly SIP: A yearly SIP of 40 lakhs reflects your commitment to long-term wealth creation and retirement preparedness.

Projecting Future Corpus
Inflation Consideration: Accounting for inflation is essential to ensure your retirement corpus maintains its purchasing power over time. Assuming an average inflation rate of 6-7% annually is prudent.

Expected Returns: With a diversified investment portfolio and an investment horizon of 19 years until retirement, aiming for an average annual return of 10-12% is reasonable, considering historical market performance.

Compounding Effect: The power of compounding amplifies the growth potential of your investments over time, especially with consistent SIP contributions and favorable market conditions.

Estimating Future Corpus
Using a retirement calculator or financial projection tool, we can estimate the potential corpus you could accumulate by the age of 65 based on your current SIP contributions, expected returns, and inflation rate.

Conclusion
By diligently contributing to your SIPs and leveraging the power of compounding, you have the potential to achieve a substantial retirement corpus by the age of 65. Regularly reviewing your investment strategy, adjusting for changing market conditions, and staying disciplined in your savings habits will further enhance your financial security in retirement.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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