Premature Withdrawal and taxation on iWish Account ?
Thanks Manish for sharing this very useful investment article.
If fact i have opened i-wish goal. But I have 2 question.
– Banks are giving 4% interest on saving account and i always keep around 5 lakhs in my account for emergency need. Can i switch saving account money to I-Wish account so that i would get higher interest (i,e. 9% for 13 months) and more over anytime we can withdraw the amount. yes there is penalty charges for premature withdrawal (0.50%) but still i would earn 4.95% extra. Please suggest is this good idea?
– What about tax? I am in 30% slab and who would deduct the tax. Does i-wish debit the tax and credit the interest in saving account or i have to declare this interest earning separately while filing tax?
Dear Niraj, do you mean to say RD is tax free and FD is taxable or you want to evade tax on your RD interest? Please clarify.
iWish account is not a Liquid Fund. It is a type of RD. Check about liquid funds in the below link.
Thanks Ashalanshu, Due to tax i dont want to put in FD. As part of Liquid fund can i put these funds in i-wish to gain more interest?
Dear Kumar, in case of RDs, banks are not liable to apply TDS. Hence for i-wish also ICICI 'll not apply TDS on the interest part. It 'll be your responsibility to declare this interest and pay taxon your own.
As the said amount is part of your emergency fund, you may keep 50% in sweeping FDs and remaining 50% in liquid funds.
iWish is also a type of RD. So no TDS at the bank will be there. However, you have to file this returns in ITR.
Please check Liquid Funds which are tax effective than FDs and with similar returns as an FD. At the same time, they have high liquidity.