FDs vs T-Bills vs LiquidBees

Taxation
13

Hi @rutu7355608

Here are the taxation aspects of the 3 options stated by you.

  1. Fixed Deposits: All Fixed Deposits do not attract tax exemptions. There are specific FDs that offer tax benefits. Such tax saving Fixed Deposits are different from normal FDs. The Tax Saving Fixed Deposits allow you to claim a deduction u/s 80C up to Rs 1.5 lakh from your taxable income. However, the interest income earned on the fixed deposit is fully taxable at the slab rate under “Income from Other Sources”.
    A TDS at 10% is also deducted at the time of receiving the interest if the interest exceeds ₹40,000 (₹50,000 for a senior citizen).

  2. T-Bills: T-bills are bought at a discount and sold at par. The appreciation is considered STCG and taxed as per the applicable slab rate. However, you’re not required to pay any TDS upon redemption of these T-bills.

  3. LiquidBees: The dividends received are taxed under “Income from Other Sources” and when you sell these units, gain on such transfer is taxed under Income from capital gains.

Considering all these points, a tax-saving FD is a better option. Though with a tax saving FD, your funds are blocked for 5 years, you can claim the deduction u/s 80C. Even though the interest is taxable, TDS will not be deducted if the interest does not exceed ₹40,000.

Hope this helps.

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