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Did not furnish PAN for FD? You can’t claim TDS credit now

If you are filing for TDS then there must be some questions running in your mind. In this article, we will see how PAN affects your TDS report.

Question: My mother is a senior citizen who has not provided her PAN to the bank. She has had income tax deducted from her FD for the previous three years. What is the procedure for obtaining Form 26 AS or Form 16 for income tax deductions on FDs?

TDS

Expert’s answer: On interest paid on fixed deposits, the bank is required to deduct tax at the source. Following that, the bank must file a TDS return; in which it must record the tax deducted against the deductee’s PAN. This information is present on the deductee’s Form 26AS. Hence, allowing them to claim credit for such tax against their final tax burden at the time of submitting their return of income.

Because you had not provided your PAN to the bank for the previous three years. The bank’s TDS returns would have said: “PAN not available”. As a result, the tax deducted will not appear on your Form 26AS. Hence, you will be unable to claim TDS credit.

PAN CARD

Even if you provide the PAN now and the bank revises its TDS return to reflect the tax deduction against your mother’s PAN. Still, you will be unable to claim credit because the TDS credit lapses if you do not claim it while filing the relevant assessment year’s return/ revised return; the time limit for which has passed in your case. Form 26AS can now be downloaded by going to the ‘e-file’ tab of the income tax e-filing portal and clicking on ‘view Form 26AS’. After successfully depositing TDS with the government, the bank has an obligation to provide the deductee with Form 16; which is a certificate of TDS.

Daily News

Your Money: Opening a Fixed Deposit? Check these 5 parameters first

In India, the most common financial tool is the fixed deposit (FD). People typically invest in FDs to achieve financial goals such as home construction, car purchase, weddings, further education, and so on.

An FD can also assist you in effectively planning your retirement. However, Investors must consider a few parameters before opening an FD account to maximize their earnings. In this article, we are listing a few of the major considerations, that help you in effectively comparing the best FD for you.

Duration of Fixed Deposit

An FD’s duration is proportional to its interest rate. For example, the return on a 10-year fixed deposit is always higher than the return on a one-year FD. Short-term (1-3 years), medium-term (3-5 years), and long-term financial goals can all be met with FDs (5-10 years).

duration of fixed deposit

Interest rate

The best FD interest rates are now hovering around 6.70 percent, with elderly persons receiving a 0.25 percent higher rate. There are two sorts of interest rates: cumulative and non-cumulative. The invested amount is locked until maturity in the cumulative mode, and the accrued interest and principal are credited at the term’s end. You can earn a fixed interest amount every month, quarter, half-yearly, or annually in a non-cumulative manner. To receive the best returns, choose the correct type of FD when opening one.

Rating

CRISIL and CARE are credit rating agencies that issue ratings to financial institutions based on several factors. CRISIL FAA+ or CARE AA-rated financial institutions are regarded as the best. As a result, examine the credit rating of the financial institution to reduce your risks.

Loan facility

People typically request loans when they have an immediate financial need. However, when you open an FD, you automatically become eligible to take out a loan against it. These loans allow you to withdraw up to 75 percent of your investment at a 2% higher interest rate than the best (highest) FD interest rates currently available. The loan term is equivalent to the FD term in this scenario. As a result, if you invest in a 10-year FD and seek a loan in the second year, you will have eight years to repay the loan.

fixed deposit money

Financial institution : fixed deposit

All FDs are excellent, but not all financial institutions are. Before opening an FD account, research the financial institution’s characteristics and value-added services.

For more such updates, keep watching this space!

Finance Financial Advice

Benefit of Fixed Deposits: Need cash? Go for Overdraft Against Fixed Deposit

There are times when we need instant money, we think of taking a loan. Or we think of breaking the fixed deposit to get instant money. But there is another option to go for overdraft against your fixed deposit. In this article, we will see how overdraft is way better than taking a loan. Let’s learn what is overdraft. How does it work? Who can apply? And, what are the documents required to apply?

What is an overdraft?

Overdraft is basically is an extension of money from the bank when your account reaches zero. The bank allows the customers to borrow some set amount of money. It can be useful to get rid of fees for bounced or returned payments. Some bank offers free overdraft facility also.

Also, let’s understand one more advantage of overdraft. Suppose you have a sum of one lakh rupee in your account and you need a sum of one and half lakh rupees to withdraw. Then your bank allows you to borrow this extended sum of money after some document verification process. Hence we can withdraw some extra amount without even taking any loan.

Who can provide the overdraft facility against fixed deposit?

Most of the banks and financial institutions avail of this facility of overdraft. The institution can be government, private, small financial institution, etc. There are only a few banks that do not avail of this facility.

There are two types of overdrafts facility available at almost every bank and other financial institution.

  • Secured – In secured accounts OD, the bank gives this facility against some collateral as a security in case you are not able to pay it later.
  • Non-secured – In non-secured OD, the OD is not given against any collateral. This is given by the verification of your account transactions. And it depends on the credibility.

Overdraft v/s Loan

Time Limit

The loan is a fixed amount that is bound to a fixed time period where an overdraft is variable is not even a time-bound facility. You can not pay your loan amount before the time period is decided. You additionally have to pay the penalty to pay it early. But in an overdraft facility, you can pay back the bank as soon as you have completed your financial tasks without any penalty on it. Isn’t it the big advantage to prefer an overdraft facility instead of taking a loan?

Interest to be paid

As we discussed above loan is a fixed tenure facility. Thereby we pay the interest for a certain amount of time and that too way greater than the interest we pay in an overdraft facility. As we know overdraft is for only the time period that we decide. As long as you are using the overdraft facility only for that time you need to pay the interest. The interest in OD facilities is comparatively less than the loan facilities. This lower interest rate thus helps you to save money and the money saved is the money earned.

Credit score

A personal loan for shortly can hit your credit score. In the case of the OD facility, it doesn’t affect your credit score at all. In fact, it helps you improve your credit score if you use it sensibly and pay it off regularly.

It is well-known that a Good Credit Score is a sign of good financial health. It enhances your chances for future loans and nowadays it also makes you eligible for some exclusive schemes. These schemes help in extra savings in your future purchases or provide a bigger limit on the purchase made using EMIs.

Moreover, a good credit score also improves your chances of availing of an overdraft from your bank. The banks are more willing to provide an overdraft facility to those customers who possess a good credit history on their documents.

When to close a Fixed Deposit!

When to close Fixed Deposit

During a cash emergency, A pre-mature closing can help you a lot. The best option is to not close the fixed deposit and earn interest on it. Besides you can take OD facility against it. But if you need to break the fixed deposit prematurely there are certain things you keep in mind. Premature withdrawal of an FD means to get the amount before the end of its maturity period. Bank levies a certain amount of charges on the withdrawal of premature fixed deposits. These charges are known as penalties. And these charges may vary from bank to bank. For example, HDFC bank and Bajaj finance apply penalty charges of 1% whereas SBI and ICICI bank keeps it to 0.5% to 1%.

PNB Housing finance levies charges of 4% on deposits up to 6 months and 1% for above six months.

There are two ways to execute the process of closing. You can either do it online or you can visit your bank branch to do it offline.

If a customer withdraws the FD before the maturity period, there is a loss of earning the benefits of FD interest rates like losing upon long-term savings. This can create a blow to your long-term financial goals.

fixed deposit

Recently, Axis bank has removed the penalty on Pre-mature withdrawal on all new retail terms deposits which are booked on or after December 15, 2020. This facility is applicable on the 2-year term deposits. It will be applicable if they are fully withdrawn within 15 days of the investment.

So, there is an overdraft option available to us in case of a sudden financial need. This overdraft is a better option than a personal loan or premature braking of a fixed deposit. However, the overdraft facility also incurs a cost with it in the form of interest to be paid. Hence, it is always better to plan your finances effectively and mitigate such scenarios where a sudden need for money may arise. Also, It is advisable to keep a small fraction of your savings in a readily available liquidity form. This can assist you in the time of an unexpected need for money and hence save you from any debt.

For more such updates, keep watching this space!