FAQs About Tax-Saving Investments and Smart Tax Strategies:

Discover answers to frequently asked questions about taxes and tax-saving investments. Learn about various tax-saving options, deductions, and exemptions available under different tax regimes. Explore strategies to reduce taxable income, maximize returns through tax-efficient investments like ELSS, PPF, and NPS, and gain tips for building a financially secure and tax-compliant future.

Q. Tax Saving Options in the New Regime:

A. The new tax regime does not offer most of the common deductions like 80C, 80D, etc. However, there are specific exemptions:

1. Employer’s Contribution to NPS (Section 80CCD(2)): Up to 10% of basic salary.
2. Standard Deduction for salaried individuals: ₹50,000.
3. Interest on Home Loan (Section 24): Limited applicability in select cases.

Q. Can We Apply for 80C, 80CC, and 80CCD Together?

A. Yes, under the old regime, you can combine:

• 80C: Up to ₹1.5 lakh for investments like PPF, ELSS, etc.
• 80CCD(1B): Additional ₹50,000 for NPS investments.
• 80CC: Rarely used as it applies to LIC annuity plans, included under 80C.

Note: In the new regime, these are not applicable.

Q. Can 80TTB Be Claimed in the New Regime?

A. No, 80TTB, which offers a deduction of ₹50,000 on interest income for senior citizens, is not available under the new regime.

Q. What Tax Regime to Choose if Your Income is ₹35 Lakhs?

A.

• The new regime has lower tax rates but no deductions.
• If you utilize significant deductions (e.g., 80C, 80D, home loan interest), the old regime might be better.
• Use a tax calculator to compare.

Q. Is There a Limit to How Much I Can Donate to an NGO?

A. Yes, under Section 80G:

• Donations to approved NGOs are eligible for 50% or 100% deduction, with or without limits.
• However, deductions cannot exceed 10% of your gross total income.

Example: If your income is ₹10 lakh and you donate ₹10 lakh, only ₹1 lakh (10% of ₹10 lakh) is eligible for deduction.

Q. How to Check if TDS is Deducted or Not?

A.

• Login to the Income Tax Portal: https://incometax.gov.in.
• Go to Form 26AS: It shows all TDS entries.
• Use your bank statement to cross-check for TDS.

Q. Consultant with 30LPA, Using 44ADA and New Tax Regime

A.

• Under 44ADA, you can declare 50% of gross receipts as income.
• Consider shifting to the old regime if deductions like NPS (80CCD), health insurance (80D), or home loans can significantly reduce taxable income.

Q. Is ₹1.5 Lakh Interest Limit Under 18G Per Year or Total?

A. The ₹1.5 lakh limit refers to per year interest earned under Section 80C investments like PPF.

Q. Deductions Possible in the New Regime

A. Limited deductions include:

1. Employer NPS contribution (80CCD(2)).
2. Standard deduction of ₹50,000 for salaried individuals.

Q. Can We Move From Old to New Tax Regime?

A. Yes, salaried individuals can switch every financial year when filing returns. Business owners can switch only once.

Q. Taxable Amount for Senior Citizens in New Regime

A.

• Rebate under Section 87A: Income up to ₹7 lakh is tax-free.
• Senior citizens don’t receive additional exemptions under the new regime.

Q. FD Interest Taxable for General Public

A.

• Exemption for Senior Citizens (80TTB): ₹50,000 interest per bank.
• For others, FD interest is fully taxable, with TDS applicable for interest exceeding ₹40,000 per bank per year.

Q. Options to Save LTCG Taxes

A.

1. Invest in 54EC Bonds within 6 months.
2. Reinvest in Residential Property under Section 54.
3. Utilize the ₹1 lakh LTCG exemption annually.

Q. What is meant by fixed deposit?

A. A fixed deposit (FD) is a financial instrument provided by banks that offers a higher rate of interest than a regular savings account, until the given maturity date. It is a safer investment option when compared to stocks or mutual funds. Once the investment is made, the money is deposited for a specific period, which could range from a few weeks to several years, during which the depositor receives interest. At the end of the term, the original amount deposited is returned along with the accumulated interest.

Q. How much is 10 lakh FD for 1 year?

A. If you invest 10 lakh in a fixed deposit (FD) with an interest rate of 7.85% for investors below 60 years, the interest earned for one year would be 78,500. The total amount at the end of the year would be 10,78,500.

For senior citizens receiving an interest rate of 8.35%, the interest for one year on 10 lakh would be 83,500. Thus, the total amount at the end of the year would be 10,83,500.

Q. Which bank has the highest FD interest rate?

A. Unity Small Finance Bank currently offers the highest fixed deposit interest rate at 9.1% for a specific tenure. This rate is exceptional compared to industry standards and reflects the competitive offerings by small finance banks aimed at attracting depositors seeking higher returns.

Q. Can I withdraw FD anytime?

A. You can withdraw a fixed deposit before its maturity date, but this may involve penalties such as a reduced interest rate and/or penalty fees. Each bank has its own specific terms for early withdrawal.

Q. Which bank gives 8.5% interest on FD?

A. Unity Small Finance Bank currently offers a 8.5% interest rate on fixed deposits, which is one of the highest rates available.