FMPs preferable to FDs for people in highest tax bracket
Ajay Sharma
The sum assured in motor insurance is determined keeping in view the principle of indemnity, i.e., the claim amount should not exceed the loss amount. The insured declared value (IDV) is the maximum sum assured fixed by the insured, which is basically the current market value of the vehicle. In case of a new vehicle, it is the selling price, excluding registration and insurance. In case of a used vehicle, the IDV is arrived after deducting depreciation.
The depreciation rates increases from 5% to 50% from six months to five years, depending on the age of the vehicle. For vehicle of more than five years, the IDV is decided by mutual agreement between the insured and the insurer or assessed by the surveyor/dealer. It is highly recommended that the IDV is nearer the market value. If it is higher, then the claim will be restricted to the market price less depreciation. If it is lower, then the claim will be lower than the actual loss. However, the lower the IDV, the lower will be the premium.
I have bank FDs worth R10 lakh. I get interest of R1 lakh out of which 10% TDS is deducted. Do I have to show the interest of R90,000 in my income from other sources, which will then attract another 30% tax as I am
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