Taxpayers are expecting some good news from the Indian government in the Union Budget 2022. It is because banks have recommended them to include the 3-year FD under tax benefits. Therefore, the fixed deposit tax exemption of Rs. 1,50,000 that was initially provided by a 5-year tax-saving FD might now be applicable to the 3-year FD. It is good news for investors who are looking for short-term investments that also come with tax benefits.
Right now, only the ELSS offers the tax deduction of Rs. 1,50,000 for a 3-year investment tenor. However, as it is a type of mutual fund, there are some risks associated with it. Therefore, tax-saving FDs will help you to save taxes while growing your deposits in a risk-free manner. Some other things that you can expect from the upcoming budget are listed below:
Increase in tax exemption limits
In the upcoming budget, the government might adjust tax rates and enhance the limits for availing tax exemption. Salaried individuals get a standard deduction of Rs. 50,000. You can expect it to increase up to Rs. 1,00,000 so that the post-inflation returns don’t wipe away the purchasing power of investments completely.
Increase in FD rates
The strong inflation along with the low interest rates have made the investors look away from fixed deposits. Therefore, you can expect the banks to increase in the near future. Here are a few things that you can do to ensure higher returns from fixed deposits:
Invest in company FDs
The returns offered by a 3-year tax saving FD might not be lucrative as the bank FD rates are low currently. The SCSS scheme, which is a government-sponsored savings scheme, is still offering a high interest rate. However, only senior citizens are eligible to invest in SCSS. You may earn a high interest without taking any risks by investing in a company FD like Bajaj Finance FD. The FD returns provided by bank FDs and Bajaj Finance FD upon investing Rs. 20,00,000 for a period of 3 years are given below:
| FD Scheme | Amount | Tenor | Interest Rate | Interest gains | Maturity Amount |
| Bank FD | Rs. 20,00,000 | 3 years | 5% | Rs. 3,21,509 | Rs. 23,21,509 |
| Bajaj Finance FD | Rs. 20,00,000 | 3 years | 7.05% | Rs. 4,53,522 | Rs. 24,53,522 |
As you increase the tenor, Bajaj Finance FD will provide you with much higher returns. Therefore, the purchasing power of your FD investments gets enhanced with investments like Bajaj Finance FD.
Ladder FDs to earn higher returns
Saving taxes is not the only way to earn enough returns for attaining your investment objectives. If you invest in FDs and ladder the deposits smartly, you get the advantage of higher liquidity. Also, the option of earning from your deposits at a higher rate becomes viable. For that, you will need to invest in multiple FDs and lock-in some of your deposits for a shorter tenor.
The multi-deposit feature applicable with Bajaj Finance FD gives you the alternative of investing in several FDs with one cheque. The option of choosing varying tenor, amount, and FD type for your deposits enables you to ladder FDs without any hassles. The FD calculator provided on the portal of Bajaj Finance will help you to plan your finances efficiently.
Reinvest returns in cumulative FDs
After laddering deposits at different tenors, set aside some of the FD returns and reinvest them in a high-paying cumulative FD. Bajaj Finance FD is offering an interest rate of up to 7.05%. Also, the option of auto-renewing FDs is available with which you can expect your interest earnings to be compounded over a period.