The cost of living in the country is constantly increasing and Budget 2019 has offered positive signs for investors. The most important fixed deposit (FD) update is the removal of the traditional (Tax Deducted at Source) TDS deduction limit on FDs. This was a proposal by the Ministry of Finance, which has appealed to all the citizens of the country. In case of FDs, the interest earned up to an amount of INR 40,000 will be exempt from any TDS deduction starting this financial year. This is a major reform when it comes to FDs, as earlier the exempted amount was up to INR 10,000. It is this reason why you should consider FD as an investment this year.
Why is FD an attractive investment avenue?
The repo and reverse repo rate increased twice in 2018 and this meant stressful news for borrowers who had to go through an interest hike on their loan. However, it also meant good news for investors because banks, as well as, companies had to revise their fixed deposit interest rates. This hike was carried out to balance a rise in the cost of the loan. The rate hike has increased the faith of investors in FDs and has increased their investment significantly. This movement, which began in 2018, has turned highly significant with the TDS deduction nod in 2019.
The implementation of new tax slabs
As per the Interim Union Budget for 2019-20, there was a revision in the tax slabs for individuals and this meant that individuals earning an income up to INR 5 lakh in a year will remain exempted from tax. Further, those earning an income up to INR 6.5 lakh or more can claim deduction under certain sections and get a complete exemption from their taxable income. This means you can now allocate more funds towards FD investments to make the most of the new slabs.
You can now make the most of the FD interest rates and the tax slabs by making an investment in FDs right away. As per the external benchmark system, the FD interest rates will not see any more hikes and with the tax exemption for you, it is very likely that you will prefer high-interest FDs. You can make the most of FD rates in 2019 by opting for a reliable financial institution as compared to a bank. They offer lucrative interest rates and are an ideal place to put your money. If you are a current loan customer, you can also get an additional interest on the investment.
You can begin your investment with an amount as low as INR 5,000. You can choose from the different payout frequency options. There is a higher interest rate for senior citizens.
The above-mentioned factors ensure that FDs remain a preferred investment option for individuals across the country. Consider the income and align your goals to investments in FDs. In order to earn maximum returns, remain invested for a long period of time and ensure that you do not withdraw the FD before maturity.