Split Fixed deposit into many different banks


Hi All

I’m working in software company and my Indian gross salary is Rs 4.5L per annum.

I’ve recently returned from overseas and I’m planning to invest Rs 10L (earned from overseas) in fixed deposit.

I came to know, to avoid Tax on interest we should make sure the interest earned in each bank should not exceed Rs 10,000.

So i have identified 10 public sector banks and decided to invest 1L in each bank starting from next year. In that way easier for me to re-invest next year. Also I’ll get deposit insurance.

Say in January 2016, 1L in SBI
in February 2016, 1L in Andhra Bank
in March 2016, 1L in Canara Bank

in October 2016, 1L in Corporation bank

Please advise the good’s and bad’s in the above way of investing.



It is true that if the interest earned from 1 bank is not crossing 10K per annum, the bank will not deduct TDS. But however, when you file your ITR, you will have to show the income received from interest as income from other sources and pay tax for it. So it doesn’t matter even if you split the deposit in different banks. It will only increase your hassle of managing 10 different accounts.


hi Dhanya

Thanks for your response.

Yes Agree. Tax paying is mandatory.

Below are my concerns. If we put 10L fixed deposit in same bank and same branch

  1. 10% TDS will be deducted for 10L it may be Rs 8500. Is there any way we can get back the TDS?
  2. Deposit insurance. It is not applicable if the FD value is greater than 1L. Is to okay not to have Deposit insurance?
  3. Will bank question anything on amount 10L if we put bulk FD in a same bank? Note I’ve paid tax in abroad for this money and remitted to India via SBI South Africa to SBI India.



Hi ,

If you are an NRI and your money is in NRE account you can still do the fixed deposit and no TDS will be deducted.

There is no TDS deduction for NRI.


Hi Bala,

TDS deducted from your income can be claimed back when you file tax and having sufficient tax saving options like a home loan, insurance premiums etc.

Deposit insurance is a personal choice. Not mandatory

If you have paid tax abroad for that money, that was against getting it as an income I guess. Now the tax you are paying against this amount is the tax for the interest you are earning for this.


Loan against Fixed Deposit helps you fulfil your urgent financial needs without breaking the FD.

a) The Bank sanctions a percent value based on your FD.

b) Interest is charged only on the utilised amount & its tenure.

c) No charges on prepayments

Yes, you continue to earn interest on your existing FD