सावधि जमा के ब्याज पर टीडीएस (TDS)

What is TDS on Fixed Deposit?

When one receives a payment, the person making the payment must deduct tax before paying. The tax thus deducted is called tax deducted at source (TDS), which the payee has to pay to the central government.

Similarly, banks deduct a TDS when crediting interest on a fixed deposit to one's account. However, 10% TDS is deducted only when the amount of interest is above Rs. 40,000 for individuals other than senior citizens. For senior citizens, 10% TDS is deducted only when the interest exceeds Rs. 50,000.

The above points are subject to change as per extant guidelines.

Who Deducts TDS on Fixed Deposit?

Wherever the customer deposits fixed deposit i.e Bank, Post office or NBFC, they will deduct TDS as per income tax guidelines.

What is the Exemption Limit for TDS Deduction on FD?

The exemption limit for TDS deduction on FD is as per income tax guidelines. However as per the current guidelines, the exemption limit for TDS deduction on FD for individuals except senior citizens is Rs. 40,000, and for senior citizens, the exemption limit is Rs. 50,000. Also, individuals with a total taxable income of less than Rs. 2.5 lakh are eligible for exemption from paying TDS on their FDs.

The above points are subject to change as per extant guidelines.

How is TDS Computed on Fixed Deposit (FD)?

TDS is computed on the interest paid / accrued on the Term deposit during a financial year as per guidelines laid by income tax department.

How to Avail TDS Waiver on Fixed Deposit (FD)?

To avail TDS waiver on FD, one has to submit Form 15G and Form 15H to the concerned bank. These are self-declaration forms that one must submit to the bank where they hold an FD account, requesting not to deduct TDS on FD interest income because their income is under the basic exemption limit.

Also Read - What Is Tax Saving Fixed Deposit?

What is Form 15G and 15H?

Form 15 G

When a depositor’s annual income is less than Rs.2.5 lakh (or Rs.3 lakh for senior citizens) and tax due is nil, then the depositor must file Form 15G or Form 15H with the bank requesting the bank to not deduct TDS on interest income from FDs exceeding Rs.40,000 or, in the case of senior citizens, Rs.50,000.

Form 15H

Form 15H is similar to Form 15G, except that Form 15H is exclusively for senior citizens who are 60 years and above in age.

Conditions For Form 15H

• The depositor should be 60 or above of age
• Annual income should be less than Rs.3 lakh in case of senior citizens and Rs. 5 lakh for super senior citizens.
• Should be a resident Indian.

Some examples of Form 15G/H

Mrs. Dsouza is 35 years old. Her annual income is Rs.2,35,000. The interest receipts on her FDs are Rs.50,000. What should Mrs. Dsouza do?

Mrs. Dsouza needs to submit Form 15G because her annual income is lower than Rs.2.5 lakh which is the minimum taxable income threshold. Since, her interest income is Rs.50,000, which is Rs.10,000 higher than the TDS exemption limit, the bank will deduct TDS at 10% if she does not file proof of her zero tax dues through Form 15G. So to prevent her loss of interest income by TDS deduction, she must file the form 15G before her first interest income is received.

Mr. Raina is 66 years old. His annual income is Rs.2,20,000 and his interest income is Rs. 60,000. What should Mr. Raina Do?

The minimum taxable income limit for Mr. Raina’s age group is Rs.3 lakh. Since his annual income is less than that, it means his taxable income is zero. So he should file Form 15H with his bank to prevent TDS deduction on his interest income which is higher than the exemption limit of Rs.50,000 for senior citizens.

In the above example, what if Mr. Raina’s interest income is Rs. 30,000 from his FD?

Since, his interest income is less than Rs.50,000 exceeding which, the bank comes into the picture and deducts TDS at 10%, Mr. Raina does not have to do anything, given that his annual income is also below minimum taxable income limit.

Please Remember

• You must submit Form 15G or Form 15H along with a valid PAN, failing which the TDS would be deducted at 20%.
• Form 15G/H must be submitted to all the bank branches where you are receiving interest income from.
• If you have multiple FDs and interest income from even a single branch exceeds Rs.10,000 in a financial year, then you must file Form 15G/H to prevent TDS deduction.