FD premature closure

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student
45 Points Posted on 30 July 2020
If i have booked an FD of 5lacs and I do a premature closure because I need to pay my daughter's fees of 2lacs. Will the 5lacs coming into the account on premature closure of the FD be taxed or only the interest
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On 30 July 2020 at 10:39 Report
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Quick Summary
If you need to close a Fixed Deposit (FD) prematurely, only the interest earned is typically subject to tax. However, if you previously claimed a tax deduction on the FD amount (e.g., under Section 80C), the entire withdrawn amount, including the principal and interest, may become taxable. For tax-efficient savings with potentially better returns and safety, consider liquid funds as an alternative to bank FDs.

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2 Points Posted on 30 July 2020
If any deduction was taken earlier in respect of FD then it will be taxable now and if n't then only interest component will ne taxable.
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On 30 July 2020 at 11:15
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6 Points Posted on 30 July 2020
You may contact your bank for premature withdrawal of FD. There will be tax liability on the interest accrued only There are liquid funds available so for tax saving purpose those are better options with higher safety and returns more than a bank FD. you may contact me for more info at himanshu.dhawan @ wisefinserv.com for better planning. We are a SEBI registered advisory firm.
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On 30 July 2020 at 11:47
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Tax and Business Consultant
11616 Points Posted on 30 July 2020
Yes, If any deduction was taken earlier in respect of FD ( like under 80C ect. ) then full value including interest will be taxable now.

If there is no Deduction taken earlier, then only interest component will be taxable on withdraw.
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On 30 July 2020 at 14:02

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