Common questions on investments and savings — SIP, PPF, NPS, mutual funds, FDs and capital gains — answered by a practising CA.
Investments & SavingsWhat is the Sukanya Samriddhi interest rate and tax benefit?Bottom line: Sukanya Samriddhi earns 8.2% a year for the July–September 2026 quarter and is fully tax-free. 1. Rate 8.2% for the current quarter — among the highest…Investments & SavingsHow is FD interest taxed and when is TDS deducted?Bottom line: FD interest is taxed at your slab rate, and the bank deducts 10% TDS once interest crosses ₹50,000 a year (₹1,00,000 for seniors). 1. Taxation Added…Investments & SavingsWhat is the difference between NPS Tier 1 and Tier 2?Bottom line: Tier 1 is the locked retirement account with tax benefits; Tier 2 is a flexible add-on with no extra tax break. 1. Tier 1 Withdrawals are…Investments & SavingsHow is capital gains tax on mutual funds calculated in FY 2026-27?Bottom line: Equity funds are taxed at 20% short-term and 12.5% long-term above ₹1.25 lakh, while debt funds are taxed at your slab rate. 1. Equity funds Held…Investments & SavingsWhat is the difference between growth and IDCW (dividend) mutual-fund options?Bottom line: Growth reinvests and compounds your money; IDCW pays out periodically and the payout is taxable. 1. Growth Gains stay invested, so the NAV rises and you…Investments & SavingsHow is LTCG on shares taxed — the ₹1.25 lakh exemption and 12.5% rate?Bottom line: Long-term gains on listed shares are taxed at 12.5% on the amount above ₹1.25 lakh a year. 1. LTCG On STT-paid shares held over 12 months,…Investments & SavingsWhat is compounding and how does the rule of 72 work?Bottom line: Compounding earns returns on your returns, and the rule of 72 estimates how long money takes to double. 1. Rule of 72 Divide 72 by the…Investments & SavingsELSS vs PPF vs NPS for 80C — which should I pick?Bottom line: All three save tax under 80C (old regime), but they differ in risk, lock-in and returns. 1. ELSS An equity fund with the shortest lock-in (3…Investments & SavingsSIP vs lumpsum — how are returns calculated?Bottom line: Both invest in mutual funds; a SIP spreads it out and averages your cost, while a lumpsum goes in at once. 1. Rupee-cost averaging A SIP…Investments & SavingsWhat is the PPF interest rate, maturity and can I extend it?Bottom line: PPF earns 7.1% a year for the July–September 2026 quarter, matures in 15 years, and can be extended. 1. Rate 7.1% for the current quarter —…