Normal people show interest in bank deposits rather than stock investments. This continues even for educated middle class people too. All the banks in our country are sanctioning crores of rupees as loans. These crores are nothing but the money we deposit for savings. So lets see how banks are profited through our deposits……
Banks are safe and has support from government. This the reason why people choose banks for savings. In the last 15 years our economy had been completely changed. Interest rates on deposits have let down. people also should think of alternative for more profitable savings.
The present day interest rate on bank deposits is as 7.5% on an avg annually. The inflation rate of the country as of july 2016 is 6.07. Inflation is a term which reduces the value of rupees. Net profit is counted as interest subtracted by inflation rate[7.5-6.07=1.43].
MORE THAN 10000,
For example – Prashanth deposited 1.5 lakh rs in a bank. With Interest rate is 7.5% his total income per year will be 11,570 including compound interest. Income tax will be applicable as you income crossed 10000. Banks transfer 10 %[tds] of the income to income tax dept. If your pan no is not submitted in the band then then tax applicable is 20 % tds.
NO PROPER EARNINGS..
On above ex if prashanth invest 1 lakh rs. His income will be 7.714 rs. income tax is not applicable in this case. for 1.5 lakh deposits his income is 11.570 subtracted by tax 1,157, his net income is 10,413. Income tax will be counted on all the deposits made by us.. Banks only collect tds if our income is more than 10000.
Income tax payers are differentiated to 10 %,20%,30% based on their income. people who are in max tax slab should have invested in other depts for tax exemptions based on section 80 c. It will be a big loss for them if they deposit in the banks. so if prashanth is in 20 % tax group, his income 7,714 on bank deposit of 1 lakh will be subtracted by 1,542 as tax. his net profit is 6,172 which is very less compared to other investments.
There is an exemption of tax on savings income. But it is calculated along with our total income for tax. We also file for tax returns if our total income is under tax pay ability .But lot of people does’nt show interest in file ing tax returns for 1 -3 thousands. In the case of tax payers,interest income is added to total income for tax counting.
GET TAX EXCEMPTIONS….
If we deposit small amount in different branches of same bank thinking of tax exemption, it is wrong. All the income on deposits of yours will be added by tracking pan no to value the tax. There is a chance to escape from tds if you make deposits in different banks. But these days income tax dept is sending notices in this type of cases. Interest rates on savings accounts in just 4 %. In that if we check the inflation rate our income will be very less on this. so people should think of investment process we we can make more profits above the inflation rates.
earnings on equety mutual funds in 12 % or more.even if we invest is less risky balanced funds, we earn 10 % or more. even if we invest in PPF, we earn 8% or more. If your interested more in deposit than invests, make your deposits in tax exempted bonds to escape from TDS. Those who have basic economic knowledge doesnt deposit in bank for profit.
Senior citizens go for safer traditional deposit process.They can also be profited by investing half on bank deposit and remaining in mutual funds..
If our annual income is under 2.5 lakhs then we exempted from tax. If our total income on in in the limit then we can get exempted from TDS by submiting forms 15 h, 15g in the bank. Banks does’nt count the tds exemption if you dont submit this form. Then we can file returns .
THINGS TO REMEMBER BY DEPOSITORS…
In banks we get insurance on only 1 lakh of our deposits. In case if bank get destroyed due to financial problems, we only receive 1 lakh from the insurance. so deposit your total income as one lakh in each different bank. lot of people deposit in the names of their children or wife. If the named person does’nt have any earnings, banks add the total income to head of the family and cuts tds
Deposits re safer for aged people.you can change the deposit scheme in between if you want. we can also go for over draft with out canceling the deposit. this is very use full for retired persons to earn monthly income after retirement.
for ex ramanadham got retired recently. He deposited 5 lakh of the money he earned during retirement. Every month he earns 30000 on that. After few years too the amount he deposited and income he receive monthly will be constant. But rupee value gets reduced. so if he invest atleast one thousand of his monthly 30000 in mutual fund, he can be profited more.