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<b>Banking:</b> Prashant Joshi

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Business Standard
Last Updated : Aug 27 2014 | 2:00 PM IST
This article has been modified. Please see the correction at the end.

If I put money in a tax-saving fixed deposit, is the entire amount (principal and interest) exempt from tax?

By the Income Tax Act, the maximum amount that can be invested in a tax saver fixed deposit is Rs 1.50 lakh and you can claim deduction under the overall limit of Section 80C.

In line with the existing income tax guidelines, the interest is not exempt from tax and tax will be deducted at source on the interest amount paid or credited in the deposit account.

I am 63 and I am aware that I will not be given a home loan. But will I be sanctioned a home improvement loan? I need to renovate my ancestral house and am falling short of Rs 5 lakh.
Most lenders have a maximum cap on age of the borrower at the time of loan maturity (60 for salaried and 65 for self employed) and offer loan tenure based on this criteria. Since you are already 63, it is difficult to get a loan and even if you get one, it may be for a very short tenure. However, most lenders would favourably consider your application if you bring in an income earning spouse or child as a co-borrower for your proposal. Home loans are extended only for purchase/construction of a new property for renovation of a house, the type of loan offered is home improvement loan/loan against property.

Some banks, including yours, give Business Instalment Loans. Who can take this loan and for what purpose?
These are unsecured loans payable in monthly instalments, usually up to Rs 50-75 lakh. These are mostly offered to small and medium enterprises, to meet their short and medium-term business requirements like working capital, machinery purchase and so on. Since these are unsecured loans, the interest rate charged is higher than on other secured or collateralised facilities.

When taking a home loan should I take the loan insurance cover (term plan) from the same lender? Or, should one shop for it on their own? Which one is more beneficial?
It would be a prudent move to avail of the loan insurance cover along with the home loan as it ensures peace of mind to your dependents. The choice of insurer is entirely up to you and it would be sensible to check with a few insurance companies (including online term plans) before deciding on the service provider. Availing the insurance cover from the insurance company that your home loan lender has tied up with, would probably be a hassle free experience as you may be exempted from medical tests and would not need to provide documents like income proof / KYC documentation.
 
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
Today, Prashant Joshi, MD & head, private & business clients (India), Deutsche Bank, answers your questions
 
CLARIFICATION
The reply to the first question had a contradiction which has been corrected. We regret the error.


 

 

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First Published: Aug 25 2014 | 12:14 AM IST

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