Hi there,
To understand when TDS is deducted on FD, let us understand the meaning of TDS. The full form of TDS is Tax Deducted at Source. When we receive payments from an organisation, the organisation has to deduct a certain portion as tax before paying. The tax deducted at the source is called TDS which the organisation pay to the Central Government. You can save on your taxes by investing or renting properties.
Now, although fixed deposits are good investment options with low risk, you may need to pay tax if you are investing in fixed deposits. The amount we earn from Fixed Deposits as interest is taxable and falls under 'income from other sources' in the tax form. Let us learn about the TDS rule on FD interest.
When is TDS deducted on FD?
During the maturity time, FD banks may opt for FD TDS deduction. If you have invested in FD for a long period of time TDS will be deducted on FD.
Let me explain how TDS deducted from fixed deposit with an example. Let's say a person earns Rs. 40,000 interest and he has invested on FD for a tenure of 4 years interest. For this amount, the person will attract a TDS of 4%. Which means Rs. 4,000 TDS will be deducted in total. But the bank will not wait to deduct the TDS in the fourth year nor they will deduct a total TDS in the first year. They will deduct Rs. 1000 every year for the next four years.
Although for senior citizens, the TDS is deducted if the interest on FD exceeds more than Rs. 50,000.
If your total yearly income is below the minimum taxable slab, TDS will not be deducted for the interest you have earned from your fixed deposit. To get tax exemption on your FD you will need to submit 15H and 15G to your bank at the beginning of the financial year.
I hope you have learned about when TDS is deducted on FD now.
Read more:
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Authors Of The Question
When TDS is deducted on FD?
Garfield
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2 Year
2022-01-27T18:45:15+00:00 2022-01-27T18:45:17+00:00Comment
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