Fd - TDS


#1

Hi, I opened FD for 5L on 9/1/2018 for 91 days at the rate of 6.75% and it matured on 10/4/2018. The actual interest that was shown in the invoice during opening the FD was 8414 Rs, but when it matured, i got only 7656 Rs. When asked the bankers, they told TDS is deducted (please note I earned more than 10K interest during 2017 FY and 0 interest so far in 2018), but this interest (7656Rs) earned and credited only in 2018 FY. How can they deduct the TDS? I wanted to know if the TDS will be calculated and deducted immediately while opening FD or will they deduct only at the time of maturity?

Thanks,
Pradeep


#2

Hi Pradeep,

Any interest you earn from your Fixed Deposit is a taxable income and not tax free, under the Income Tax Act 1961. The taxes will be levied on the individual as per their income tax slabs. Basically a fixed deposit will pay out the interest upon maturity and if the interest earned through such Fixed Deposits crosses Rs. 10,000, the bank will deduct TDS.

However, if your total income including the interest from FD falls under the non-taxable bracket then you have to submit Form 15G with the bank. For senior citizens it’s Form 15H. If your banks deducts TDS even after you have submitted the required forms, then you can claim a refund when you file your returns.

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Cheers,
BB Expert


#3

Hi, Thanks for your reply. From your statement - “Basically a fixed deposit will pay out the interest upon maturity and if the interest earned through such Fixed Deposits crosses Rs. 10,000, the bank will deduct TDS” I understand the TDS will be deducted only if the interest earned is crossed 10k during the financial year. But it my case, the interest earned is just 8k in total in 2018 FY but still they have deducted TDS. Is this correct?


#4

Hi Pradeep,

Even if you don’t have taxable income, the bank might assume that the interest is taxable when you don’t provide Form 15G/H. Form 15G is a declaration under sub-sections (1) and (1A) of section 197A of the Income Tax Act of 1961, to be made by an individual (not being a company or firm) claiming certain receipts without the deduction of tax. The eligibility criteria to submit this form has been listed below:

• Form 15G can be submitted by individuals below the age of 65 years or by a Hindu Undivided Family (HUF).
• Form 15G should be submitted before the first payment of interest on a Fixed Deposit.
• The individual should submit this form to all deductors, i.e., this form will need to be submitted to each bank branch through which the individual is collecting interest.
• This form can only be submitted by individuals whose tax payable on their total income is zero.
• The individual should be a resident Indian.
• The total interest income is less than the minimum exemption amount for that year. The minimum exemption amount is Rs. 2,50,000.

Looking for a Fixed Deposit? Click here.

Cheers,
BB Expert