Tax saving FD has been broken before time, so now more tax will have to be paid, know here what is the rule

A rebate of up to Rs 1.5 lakh can be taken under the Income Tax Act 80C
To avail the income tax rebate, you have to invest for a fixed time.




Many people invest in such a place where they can get the benefit of tax exemption to save income tax. Under this, investors invest in equity funds in Equity Linked Investment Plan (ELSS), Unit Linked Investment Plan (ULIP) and Tax Saving FD. But to get the benefit of income tax rebate, you have to invest for a fixed time. Before withdrawing money, you will not get the benefit of tax exemption. We are telling you how much tax you will have to pay in such a situation.

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The benefits of tax exemption are available under many schemes.

Post offices are running many such schemes, by investing in which you can avail tax rebate up to Rs. 1.50 lakhs under Income Tax Act 80C. This includes National Savings Letter or NSC, Senior Citizen Saving Scheme (SCSS) and other schemes including term deposits. Investing in these schemes and other schemes including tax saving FDs requires investing for up to five years to save tax.

Tax liability increases when you withdraw money ahead of time.

Suppose you invest money in Senior Citizen Saving Scheme, whose maturity period is 5 years. If you withdraw money before maturing, then you will get full interest on it, but your tax liability (liability) will increase. Similarly, in ELSS, 3 locks in period. You will have to pay full tax even if you withdraw money before 3 years.

How much tax will I have to pay?

On the year you invested in these schemes, you availed tax exemption of Rs 1.5 lakh under Section 80C of the Income Tax Act. If you remove it before maturity, then the year you did it, that year, the entire amount will be added to your income, on which you have taken advantage of income tax exemption. Apart from this, the interest received will also be added to your income. After this, you will be charged tax based on the income tax slab you will come across.

Understand by example: Suppose you have availed tax exemption of Rs 1.5 lakhs on annual income under tax saving FD in 2019 (2019-20). But if you break it after one year instead of 5 years in 2020, then the tax rebate on 1.5 lakh rupees you have taken will be added to your 2020 (FY 2020-21) income. After this, you will be charged tax based on the income tax slab you will come across.

What is section 80C?

Section 80C of the Income Tax Act is actually a part of the Income Tax Law, 1961. It mentions investment channels in which investment tax income tax exemption can be claimed. Many people start investing to save tax before the end of the financial year. Under Section 80C of the Income Tax Act, you can claim deduction of Rs 1.5 lakh from your total income. Understand this in easy language, you can reduce your total taxable income up to Rs 1,50,000 through Section 80C.

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