Is TDS deducted on recurring deposits?


#1

Is TDS deducted on recurring deposits?


#2

Earlier recurring deposits had a TDS advantage but from the budget announcements of 2015-2016, recurring deposits were brought at par with bank fixed deposits when it comes to TDS. If the interest exceeds Rs 10,000 in a financial year, banks will deduct TD at 10 % for both RD and FD investments. If you income is below taxable limit you can submit Form 15 G/H to avoid TDS or seek TDS refund.


#3

Hi Sourav,

Earlier there was no Tax Deducted at Source (TDS) for Recurring Deposits (RD). TDS has been applicable for bank RDs since 2015. They come under the category of Fixed Deposits. 10% TDS is applicable on all bank RDs.

In case you haven’t submitted your PAN details, the TDS will be 20%. However, if the interest earned is less than Rs. 10,000, it will be exempt from TDS and taxation. You need to use Form 15G/H if you fall under the non-taxable bracket if you want to avoid TDS.

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.

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Cheers,
BB Expert