Best bank account for higher interest rate

SaveMoney69 wrote:
Ok so I have savings account balance across multiple banks as 3L and 7L. If I make an FD instead of keeping as savings account balance,I can increase TDS exempted interest from 10k to 40k ?

You are misunderstanding. You will have to pay tax on all the interest amount no matter fd or savings interest. Only difference is that if FD interest is more than 40k in a bank then bank deducts 10% as tds on that amt & submit it to income tax dept. Later when you file your itr then system calculates the tax on your interest income(from fd & savings interest) as per your tax slab & if it is more than your calculated tax then you will have to pay the difference but if it is less than tax calculated then you get the difference in amt as refund.

Suppose you open a fd of 10 lakh in idfc bank at 6% interest & keep 1 lakh in hdfc bank at 3% interest so your fd interest becomes 60k while savings acc interest becomes 3k. Now idfc will deduct tds at 10% or 6k & you will get 54k at the end of 1 year FD. Now you file itr in which it will be pre-filled that your interest income was 60+3=63k(all banks report it) under other sources of income as interest income. Now you show your salary income/other income as 2 lakh so your total income becomes 2.63 lakh. Now under 5 lakh total gross income means basically zero tax so after filing itr & after it gets processed you will get a refund of 6k.

If in above example you show your salary income as 4.5 lakh then your total income becomes 4.5+63k=5.13 lakh & you will have to pay tax of:

up to 2.5 lakh--0

2.5 lakh to 5 lakh portion of income--at the rate of 5%--12500

above 5 lakh portion of the income(till 10 lakh)--at 20% rate so 20% of 13k--2600

Total tax--0+12500+2600=15100 out of which 6k tds already paid so balance amt need to be paid will be 15100-6k=9100.

P.S. Non senior citizens get up to 10k deduction for savings acc interest income so in above example your total taxable income will be 5.10 lakh as 3k will be availed as deduction under this clause. I just didn't mention it for simplicity.