Amid increasing cost of living indices, the Interim Budget 2019 offers a new ray of hope for investors. Finance Minister Piyush Goyal has proposed to let go of the decade-old TDS deduction limits on fixed deposits.
If the current government’s proposals are implemented, your interest earnings of up to Rs. 40,000 on bank FDs will be exempt of TDS deductions this financial year onwards. This is a big leap compared to the Rs. 10,000 limit that has been in action until now.
This is just one of the many reasons for which you must consider FD investments, this financial year. Here are more reasons that work in your favour.
FDs are Under The Spotlight Because Of Their Assured, High Interest Rate
In 2018, the repo rate and the reverse repo rate has been increased twice. This spelled bad news for the loan borrowers as they had to suffer an interest rate hike on the loans. However, it was good news for most investors, as this increase also meant banks and companies revised their FD interest rates.
Owing to the RBI rate revisions starting from November 28, 2018, major public-sector banks like SBI started offering higher FD interest rates on varied tenor plans. Banks carried out this rate hike to balance the raise in cost of funds. In parlance with this rate increase, SBI starting from 28 November 2018 for instance, has raised the interest rate on one-year, two-year, and three-year FDs to 6.80%.
Risk-averse investors have always favoured FDs and this rate hike has certainly increased their faith in FDs. What began as a positive investment towards the end of 2018 will affirm into a bigger movement, if the budgetary proposals on TDS deduction get a legal nod.
Multiply Your Savings, With New Tax Slab Implementation
During the interim Union Budget announcements today, a proposal to revise the tax slabs for income earning individuals was also brought on the table. If the re-structuring of the tax slabs is put in to action then individuals earning up to Rs.5 lakh in a year will be exempted from tax.
It was also mentioned that those earning up to Rs. 6.5 lakh or above can claim deductions under the specified sections to face a full exemption on their taxable income. Even though there is still time for these implications to come into action, you can certainly start allocating more funds for FD investments, in order make the most of these revisions.
Claim Higher Returns With FDs From NBFCs
You can make use of the Interim Budget’s promise and the FD interest rate hikes in the best possible way, by investing in fixed deposits by NBFCs.
This is because firstly, with the external benchmark system starting from the 1st of April, 2019, the FD interest rates will not face any more hikes. Secondly, now with tax exemption awaiting you, it is likely that you will look for assured high-interest FDs. In this regard NBFCs offer higher FD interest rates, in comparison to banks.
While you are at it, check the FDs from trusted NBFCs like Bajaj Finance and enjoy a high interest earning on your investment. Awarded ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating, Bajaj Finance FDs offer assured returns over time and park your money into safety all through the tenor. With a lucrative interest rate of 8.75%, which goes up to 9.10% for senior citizens, you can look for several exciting benefits. If you are an existing FD or loan customer, you can get 0.25% extra FD interest on your investment.
What’s more, you can start your investment with a small sum of Rs. 25,000 and can choose the frequency of your payouts.
All these factors ensure that FDs are and will be in trend in the time to come. So, evaluate your income and start aligning your goals to fixed deposit investments right now.
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