Are fixed deposits tax free?

Are fixed deposits tax free?

You have a question about recurring deposits, housing loans, travel allowances or even a general tax query.

Here's where we step in with our experts, Relax With Tax.

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I have the following doubts regarding tax. 

1. If I open a new post office recurring deposit for 5 or 10 years, can I show it  as a tax saving scheme?

2. If I buy a house in my home town for my mother who is dependent on me, can I claim the EMI as a savings for tax?

Money deposited as a term deposit for a period of five years or more is eligible for deduction under section 80C; this is in accordance with a scheme framed by the central government on April 1, 2006.

As for your second question, deduction in terms of principal and interest will be available to you for the house property at your home town.

But, if you currently own a house, then a deemed rental value would be included as income. However, the relevant deductions, including interest, is available on the amount.

I relocated to Bangalore recently on change of job and received a relocation allowance.

Can I claim tax exemption on relocation allowance? If so provide the details

I have bills  of certain expenses incurred for the purpose of  relocation e.g. real estate broker's bill, school admission amount, local transportation & rearrangement.

Yes. Any allowance granted to meet the cost of travel on transfer -- including any sum paid in connection with transfer, packing and transportation of personal effects related to such a transfer -- is exempt from tax to the extent the allowance is utilised under section 10(14).

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