When you open a fixed deposit account in the bank, the interest paid for the deposit will be taxable income and the banker will deduct the tax at source and pay you the remaining income to your account. This process is called as Tax Deduction at Source(TDS). If you are liable to pay the taxes, you can not evade the taxes . But, there is cases where the TDS is not applicable but still the banks may cut the income from the source. It can be avoided if you act wisely and submit the required forms. This article intend to explore that in detail. If you have any doubts please post it in the comments section. You can subscribe to our future articles here.
TDS on Fixed Deposit
- Interest on fixed deposit is taxable and will be deductible from the source.
- If the total interest amount of up to Rs.10000 is not taxable.
- If the total amount exceeds Rs.10000, 10% will be deducted as the tax. If you have not submitted the PAN number while opening the fixed deposit, 20% would be deducted as the TDS
- Tax liability for TDS purpose is determined at branch level. So, it is advisable to split the deposits into different branches and cut the tax rate. You can read top 5 fixed deposit rules.
Form 15H (download)
You can submit the form 15h, if the person is above 60 to avoid the TDS. You should know that only a person of 60 years or more is eligible to file Form 15 H.
Form 15G (download)
This form is for the age below 60. For example, Mrs. X earns Rs.25000 from the interest in a year. She doesn’t have any other income and housewife. She is eligible to file the form 15g and give it to the bank before March 31st. The tax will not be deducted from the source. There is no need to get the approval from income tax officers.
- One important point is that, these forms has to be submitted each financial year to avoid the tax deduction. It is advisable to submit in the beginning of the year.
- Where as for NRI’s who earn interest on their NRO’s account are subject to 30% TDS .
In this article I have written about the form 15h and form 15g to avoid the tax deduction at source. This might be useful for saving the tax by splitting you deposit money into other senior citizens in your family. This is time to think if you have plan to open a fixed deposit account. Thank you for reading the article!!! If you have any doubts please post it in the comments section.
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