Posted on

Latest TDS Rates for FY 2018-19 (AY 2019-20)

What is the Latest TDS Rates for FY 2018-19 (AY 2019-20)? Many of us are aware of the TDS rates applicable to Bank FDs or when our employers deduct the TDS from our salary. But do you know there are many incomes where TDS is also deducted?

TDS or Tax Deducted at Source is the process deducting the tax from the original source of income (like Bank or employer).

TDS is calculated and levied on the basis of a threshold limit, which is the maximum level of income after which TDS will be deducted from your future income/payments.

As I told earlier, apart from salary income and Bank FD earning, there are many ways TDS is deducted like  interest income from the post office, insurance commission, rent payment, early EPF withdrawals, the sale of immovable property, rent payments on property etc.,

Latest TDS Rates for FY 2018-19 (AY 2019-20)

Now let us discuss about the Latest TDS Rates for FY 2018-19 (AY 2019-20). Below is the complete chart of the same.

Note-

  • From the Budget 2018, the threshold limit for deduction of tax at source on interest income of Bank / Post office / Co-operative Bank deposits for senior citizens raised from Rs.10,000 to Rs. 50,000.
  • TDS on Life Insurance is applicable if it is not exempt under Sec.10(10D).
  • Tax Collected at Source (TCS) is applicable on purchase of Motor vehicle worth more than Rs 10 Lakh.

Latest TDS Rates for FY 2018-19 (AY 2019-20) for NRIs

  • Interest earned on Non-Resident Ordinary Account (NRO) is taxable. A TDS of 30% is applicable to it.
  • Interest earned on Non-Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are not taxed in India. Therefore there is no TDS.
  • When an NRI sells the property, the buyer is liable to deduct TDS @ 20% on Long Term Capital Gains. A TDS @30% is applicable if it is Short Term Capital Gains.
  • NRI Investments in Shares / Mutual Funds -Below are the TDS rate applicable on MF redemptions by NRIs for FY 2018-19.

Latest TDS Rates for FY 2018-19 (AY 2019-20) for NRIs

Some misconceptions about TDS (Tax Deducted at Source)

  • No TDS does not mean no tax liability. Based on the product you still have to pay the tax as per your tax liability.
  • If you paid the TDS, then your tax liability not ends there itself. You have to file IT return and if anything more than TDS is payable, then you have to pay it.
  • Submitting Form15G or Form 15H is not the solution. You have to first find out the eligibility of submission of such forms. It is a misconception that all can submit Form 15G or Form 15H.

Hope this information is sufficient for you all to understand the applicable Latest TDS Rates for FY 2018-19 (AY 2019-20).

Posted on

PPF and NSC for NRIs – Latest Rules 2018

Recently Government reversed the rule which it has notified on 3rd Oct 2017.  What is the PPF and NSC for NRIs – Latest Rules 2018? How is this impact existing PPF investors?

When its come to the question of tax saving with good interest then PPF is no doubt a better option as a small saving scheme. PPF has been a beneficial product for all investors. Even NRIs prefer to continue with their PPF accounts until the time they can, as the product earns them tax-free and safe interest. Even National saving Certificate also is considered a safe and preferred investment by many. However, NSC not enjoys the tax benefits like PPF and also NSC is not the long-term product (NSC period is 5-Yrs only).

Public provident fund (PPF) and national saving certificate (NSC) are the most common and relatively risk-free long-term investment options for Indians as they are ruled by the government. And because of its tax-free interest feature, compounded annually attractive interest rates, and section 80C tax benefit, PPF has become the first choice for every investor.

In India, a major portion of the salaried class employees would prefer to invest in PPF and NSCs as part of their annual long-term financial planning.

But if you are an NRI, then you must be aware of the fact that you cannot open a new PPF account, or invest in National savings certificate. However As per the new Amendment rules in 2017 by the Government, if you had a PPF account or NSC certificate before you become an NRI, then as per PPF account rules and NSC conditions you were allowed to continue with the same till their maturity. It means you no need to close your account rather you can continue it with the bit cut off interest rates.

 The interest for both PPF and NSC schemes stands at 7.8% p.a for October-December. Since April last year, interest rates on all small saving schemes are declared on an on a quarterly basis.

Who are NRIs?

 Before I proceed further first let clear you about the NRI concept. A person is considered resident in India if he is in the country for 182 days or 60 days in a year and 365 days in each of the preceding four years as per Income Tax Act. When a person doesn’t satisfy both these conditions, he is termed as NRI. 

On 3rd October 2017, Finance ministry in central government has come up with a quiet notification which will force all NRIs to come out of their small saving investments.

The structure of investment for NRIs in PPF

# An NRI can now invest up to Rs 1,50,000 per financial year in an existing account, that is, an account that he opened prior to becoming an NRI.

# An NRI can use funds in the NRE account or the NRO account to make investments in the PPF account. It is important to remember that the PPF rules require you to invest at least Rs.500 per financial year in the PPF account.

# If you fail to make the minimum investment in a year or years your account will be considered dormant. Subsequently, when you want to revive the account, you would need to invest Rs.500 for each year that you missed plus pay up a penalty of Rs.50.

What taxes are applicable on PPF interest for NRIs?

There are two stages at which there will be a tax implication – one in India and the other in the country of NRIs residence.

In India

In India, PPF is one of the investments available for deduction under section 80C. That is, if you have income in India (from say rental property), then you can reduce your tax payout in India by investing in the PPF. The interest income, as well as principle withdrawals, are tax-free in India.

 In the US

# The tax rules that apply in the country of your residence like in countries the US, the interest earned on the PPF will be taxable. PPF does not qualify as a retirement account under the US tax laws and therefore the interest will be taxable in the US.

# You should pay tax whether every year on the accrued interest or on the entire interest at the time of withdrawal depending on what is beneficial to you but whatever method you choose, ensure that it is followed consistently.

What are the drawbacks for NRIs?

# PPF is an attractive investment from the returns point of view – 8% tax-free. If you have income in India, PPF will also give you a tax deduction under section 80 C. However, you cannot invest too much in this account. The limit for maximum investment is just Rs.1,50,000 per annum.

# Secondly, like all investments that NRIs make in India, the PPF is also subject to currency risk. If the rupee falls significantly at the time of maturity of your account, your interest rate gains 

# Till the time the PPF account is actually closed or the NSC certificate encashed, the accumulated money in the account would earn interest at a much lower rate, equivalent to the interest earned from a post office savings account (POSA), which is 4% per annum currently.

# Also, family members accompanying the outbound assignees will get impacted on getting NRI status.

PPF account rules & NSC rules for NRIs (Before 3rd October 2017)

# Aspe the rules, NRIs were not allowed to open a new PPF account neither they can make new NSC Investment. 

# If a resident having PPF account or NSC, has become an NRI, then he is allowed to continue with the respective account till the maturity.

# If the PPF account was in an extended status, means the investor has already extended his PPF account for 5 years (after the completion of 15 years), and later become the NRI, in this case, the investor is allowed to continue the PPF account. But he will not be able to extend the account further for another block of 5 years.

# However, NRI was permitted to make a regular contribution to the maximum limit and keep earning tax-free interest (in case of PPF only) like resident investors.

# On maturity of PPF account and NSC, NRIs have to compulsorily close the account. An NRI is not eligible for the extension on the PPF account.

 PPF account rules and NSC rules for NRIs (after 3rd October 2017)

# Though NRIs still can’t open a fresh account, now NRIs even not allowed to continue with their ongoing PPF and NSC accounts, which they were earlier allowed to continue till the maturity. All accounts in the name of NRIs stands closed on 3rd October 2017.

# All NRIs, PPF and NSC accounts will earn the PPF interest rates until the date of notification i.e. 3rd October 2017. After that, they will earn Post office savings rate until they close PPF or NSC. 

# This means now NRIs can close the PPF and NSC accounts immediately irrespective of their closure rules.

# For the resident Indians who are turning to be NRIs, if they have PPF or NSC investments, their account will automatically be closed or deemed to be closed the time their residential status changes from Resident to Non Resident, and they will get Post office savings bank rate on their deposit from the day they become NRI till the money is withdrawn.

PPF and NSC for NRIs – Latest Rules 2018

Recently on 23rd February 2018, Government came with clarification with PPF investments. As per this new notification, it kept the 3rd October 2017 notification in abeyance.

This means NRIs who are currently holding PPF account, then they can continue it until maturity and enjoy the interest rate which is applicable to PPF. But they are not allowed to extend further.

However,  for NSC holders, they have to close it immediately when their status changes to NRI.

PPF and NSC for NRIs - Latest Rules 2018

Hope this new Government notification might have relieved many NRI PPF investors.

Posted on

Highest Tax Saving Bank FD Rates U/S Sec.80 C – February 2018

Which is the “Highest Tax Saving Bank FD Rates U/S Sec.80 C” for investment to save the tax? This is the common doubt under many. Hence, let us dig and find out the Highest Tax Saving Bank FD Rates U/S Sec.80 C.

Features of Tax Saving Bank FD Rates U/S Sec.80C

  • Individuals and HUF can invest in such Tax Saving Bank FDs.
  • Minimum amount to be invested varies from bank to bank.
  • Lock-in period of such FDs is minimum of 5 years. Premature withdrawals or loan against these FD’s are not allowed.
  • You can choose any Public Sector or Private Sector Banks to invest. However, you can’t invest in any Co-Operative or Rural Banks.
  • You can hold these FDs either in single or joint holding. However, the tax benefits is available only for the first holder and also the post-maturity taxation will be applicable to the first holder only.
  • Interest earned from such FDs will be taxable under the income head of “Income from Other Sources”.
  • There is no maximum limit to invest. However, the maximum benefit available under Sec.80C is up to Rs.1,50,000 for a FY.
  • Auto-renewal facility is not available for tax saving FDs.
  • You can avail the nomination facility for this FD.
  • You can avail month, quarterly or choose re-invest of interest option also.
  • TDS is applicable on such FDs.
  • If you are exempt from paying tax, you need to present Form 15G/H when you open a Fixed Deposit and subsequently at the beginning of the following financial year.
  • Usually, Banks offer a higher interest rate on such Tax Saving FDs. The reason is that 5-year lock-in.
  • Usually, Banks offer higher interest rate for senior citizens.
  • The deposit may be transferred from the issuing branch to another branch but not transferable from one bank to another bank.

Highest Tax Saving Bank FD Rates U/S Sec.80 C – February 2018

Now you fully understood the feature of Tax Saving Bank FDs. Let us move on and find out the Highest Tax Saving Bank FD Rates U/S Sec.80 C – February 2018.

Highest Tax Saving Bank FD Rates U/S Sec.80 C - February 2018

You noticed from above table that Citi Bank Offers the lowest Bank FD Rates. I tried to highlight in green for those banks who are offering more than 7% returns for both general public and senior citizens. Below are the findings to shortlist the Highest Tax Saving Bank FD Rates U/S Sec.80 C – February 2018.

  • For the general public, NSC offers the highest interest rate of 7.6%.
  • Then comes the IDFC Bank which offers 7.20% for the general public.
  • The highest interest rate for senior citizens will be available with IDFC Bank, which offers 7.7% returns. Next comes the NSC, which offers 7.6%.

Hope this information will make your life easy in shortlisting the Highest Tax Saving Bank FD Rates U/S Sec.80 C – February 2018. Do remember that we have visited the respective bank portal and based on the data we published this post. However, we caution to all readers to cross-check the available interest rate before taking the decision of investment.

If you are looking for Non-Tax Saving FDs, then refer our latest post “Highest Bank FD Interest Rates – February 2018 latest list“.

Posted on

Live Budget 2018 Highlights and review

In this post, I will try to update the Live Budget 2018 Highlights as and when it will be declared by Finance Minister Shri. Arun Jaitley.

Live Budget 2018 Highlights and review

  • Achieved 7.5% average growth after 3 years of NDA Regime.
  • This year budget will concentrate on rural, improving education, rural health and agriculture sector-FM.
  • Exports to grow at 15% in FY 2018.
  • MSP for Kharif crops to be 1.5 *Cost of Procure.
  • Want farmers to earn 1.5 times of their cost of procuring cost.
  • 470 APMCs will be connected to eNAM for transparent price discovery.
  • eNAM will be free from APMC regulatory.
  • Allocation to food processing doubled from 715 Cr to 1400 cr.
  • Operation “Green” to be launched. Agri logistics, professional management, Rs. 500 cr. – make potatoes and onions everywhere.
  • Ujwala Yojana will now target 8 Cr poor families.
  • Rs.16000 Cr to Pradhan Mantri Soubhagya Yojana.
  • Plan to move from Blackboard to digital board education.
  • Ekalavya Schools on par with Navodaya schools will be launched.
  • Prime Minister Research Fellow scheme will be launched for BTech Students.
  • National Health Protection Scheme up to Rs.5 lakh coverage for each family per year covered under health care programme to 10 Cr poor families.
  • Rs.500 per month to TB patients.
  • Mudra loan targetted to Rs.3 lakh crore for next FY.
  • Women only have to contribute only 8% of their basic pay compared to 12% by the employer during first 3 years.
  • Govt will contribute 12% of the contribution to EPF for new employees.
  • SEBI will consider mandate getting 1/4th of financing from bond markets.
  • Rs 11,000 crore allocated for Mumbai suburban railways.
  • The government will not consider Crypto Currency as legal tender.
  • Tolls payment will be pay as you use format.
  • All four general insurance companies will be be merged and listed.
  • Gold Monetization Scheme will be revamped.
  • MPs salary linked to index.
  • No change in the individual personal tax bracket.
  • The standard deduction of Rs.40,000 for salaried and pensioners.
  • Senior Citizen Health Insurance deduction under Sec.80D raised to Rs.50,000.
  • No TDS for interest income for Senior Citizens.
  • Pradhan Mantri Vaya Vandana Yojana extended up to 2020.
  • LTCG tax on equity will be if the gain is more than Rs.1 lakh at 10% without indexation.
  • Health and Education cess increased to 4%.
  • Abolish education and higher education cess.
  • Customs duty on mobile phones increased from 15% to 20%.
  • Dividend Distribution tax on Equity Mutual Fund.
Posted on

Highest Bank FD Interest Rates – February 2018 latest list

Which bank offers Highest Bank FD Interest Rates for February 2018? Let us shortlist the bank based on current interest rate.

Features of Bank FDs (Fixed Deposits)

  • You can book the FD from minimum 7 days to 10 Years.
  • However, few banks like Ratnakar Bank and IDBI Bank Offers FDs up to 20 years.
  • Interest on such FDs is quarterly compounding (if your FD is at least more than 6 months). Hence, let us say the Bank FD rate is 8% for 10 Years FD, then the effective rate will be 8.24%.
  • You can request for interest payout based on your requirement like monthly or on a quarterly basis also.
  • Banks offer the loan or Over Draft (OD) facility on your FD. The interest on such loan or OD will be around 0.5% to 1% more than your FD rate.
  • Such FDs attract TDS (Tax deduction at source) at the rate of 10%, if the interest income is more than Rs.10,000 in a financial year per bank.
  • There is a misconception among many of us that avoiding TDS means avoiding income tax. However, even if you avoid TDS, the income from Bank FD will be taxable income for you and you have to pay the tax as per your income tax slab.
  • Check for penalty clause on premature closure.
  • Never forget to use the nomination facility.
  • There are options like re-investment at maturity or credit back to your bank account. Hence, choose the option wisely based on your requirement.  You can re-invest either only principal or only interest.

For your ease of understanding, I am dividing the Bank FD rates as below.

# FD rates for less than a year.

#FD rates for 1-2 years.

# FD rates for 2-5 years.

# FD rates for 5-10 years.

#FD rates for more than 10 years.

Highest Bank FD Interest Rates – February 2018

Now let us see which bank offers the Highest Bank FD Interest Rates for the month of February 2018.

In this below table, I listed all major banks. Also, my priority is to list the FD rates which can be available for premature.

Highest Bank FD Interest Rates – February 2018

You noticed that for less than a year FDs, the interest rate varies from 5% (United Bank of India) to 7% (RBL Bank). Same way, for 1 Yr to 2 Yrs FDs, the interest rate varies from 6.25% (HDFC Bank) t0 7.1% (RBL Bank). For 2 Yrs to 3 Yrs FDs, the interest rate varies from 6% (SBI) to 7.1% (RBL Bank). For 3 Yrs to 5 Yrs FDS, the interest rate varies from 6% (HDFC Bank and Bank Of Maharashtra) to 7.25% (DCB Bank). For more than 5 Yrs FDs, the interest rate varies from 6% (Canara Bank) to 7.1% (RBL Bank).

In my view, open the FD where you have internet banking facility. This is completely hassle-free and even you can liquidate the FD at any point of time (by paying premature closure penalty) using the same internet banking facility.

Otherwise, if you book the FD physically visiting the Bank, then some banks do not allow you to liquidate the FD using internet banking.

Hence, cross-check the rules before jumping into opening FD.

Posted on

Best Personal Loan Interest Rate January 2018

Personal loans are one of the best types of loans which will come in handy when we need the money urgently. However, it does not mean we go for any types of personal loan. Hence, let us see which bank offers us the Best Personal Loan Interest rate January 2018.

This is our monthly publishing post. Hence, repeating the same information about personal loan features, eligibility, and why one must go for this. This may help the new readers before they jump into the trap called PERSONAL LOAN.

There are two kinds of interest rates like fixed and variable or floating. You can choose which type of interest preferable to you based on your loan amount.

The fixed rate personal loan is where the rate of interest is locked throughout the life of the personal loan, this cannot be changed at any time even if the rate falls or goes up over the coming years.

The variable rate personal loan is opposite to it, where the rate is subject to market volatility. If the interest rate in the market falls, you will have to just pay the reduced rates and vice versa.

The fixed rate is a kind of hedging of market volatility; variable rates are helpful if you are expecting the interest rate in the market will fall.

What affects your personal loan interest rate?

  • Income Level: The rate is totally dependent on the income level and the company where you are working. This information is compared with the loan amount and they will gauge if you are capable to repay the loan without defaulting. According to the risk involved in your repayment strategy, the interest rate varies.
  • Loan Tenure: Usually shorter the loan in the higher the interest rate will be and vice versa. EMIs are regular and fixed return for lending banks, thus when the return is for long period the rate will decrease respectively.
  • Credit Rating of the Individual: Financial institutes conduct CIBIL check to understand the creditworthiness of the borrowers. In case of any default payment records, huge outstanding loan, fraudulent track records, banks has every right to cancel the loan or charge a higher interest rate. Hence, it is very much important to keep the good track record of your credit score and repay your dues timely.

Fees and Charges Applicable to Personal Loan

There are different ways of charging by each bank. However, when you notice about charges, you will find these three common types of charges.

  • Processing Fee: This is the non-refundable processing fee; this will be different depending on the loan particulars and bank’s policies.
  • Part Payment/ Part Pre-Payment Charges: When you pre-pay loan or part of principal payable by you, automatically banks lose some income because of this. Hence, they charge for this. You have to cross check this charges also.
  • Payment Delay Charges: An additional charge is levied by every bank on the outstanding amount that is not repaid within the specific date. It is essential to make sure payment/ EMIs are processed within the deadline to avoid these charges.

Best Personal Loan Interest Rate January 2018

Now let us discuss about the best personal loan interest rate January 2018. I tried my best to provide you the complete picture and comparative table. However, I suggest you to cross check with the bank before proceeding further.

Best Personal Loan Interest Rate January 2018

Hope this information is useful for you to take an informed decision while going for a personal loan.

Refer our December month post on the same subject:-

Best Personal Loan Interest Rate December 2017