If reading this, there is a good chance you are among those individuals who pay tax on FD and insurance. Maybe you want to maximize your tax deductible donation Singapore. And there’s nothing wrong with that since it is now the norm for most people. But that is not to say you should go about this decision blindly, as you could end up paying more than you plan.
Fortunately, you can prevent this by going the extra mile to learn the tax-saving options you can leverage. Even though it might feel like a waste of your precious time, accessing this information helps shape your financial future for the better. Either way, we are here to lend a helping hand and ensure everything turns out how you expect without feeling the heat.
In this simple guide, we will take you through everything you need to know in your quest to save money on income tax. Read on to unearth more!
What Is Tax Saving Fixed Deposit (FD)?
Before we delve deeper into our topic of discussion today, it pays off to know what you are dealing with in the first place. The Tax Saving Fixed Deposit (FD) is merely a scheme that allows you to benefit from tax deductions. That is as per Section 80C of the Income Tax Act, 1961. With this scheme, you should be more than ready to make do with a lock-in period of 5 years.
Opening a Fixed Deposit account is a walk in the park since it narrows down to investing a lump-sum amount. Keep in mind you invest the amount for a specified period with predetermined interest rates. The good thing about this approach is that you no longer worry about fluctuations in the market.
How Tax Saving Fixed Deposit Scheme Works
Understanding how Tax Saving Fixed Deposit works will help you avoid last-minute surprises. The same goes if you want to reap maximum benefits from this scheme without pushing yourself to the limit. As a reminder, you can find the Tax Saving FD scheme at banks and NBFCs. While you deposit a lump sum of money for a fixed tenure, you need to cope with the lock-in period.
What this merely implies is you can never withdraw your saving prematurely. Furthermore, you pay tax on any interest you earn from your deposit. Upon expiry of the tenure, the amount is accessible from the savings account associated with the Tax Saving FD.