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How to Avoid TDS on Interest on Fixed Deposits (Bank FD)

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Bank Fixed deposit is an all-time favourite investment in India as it provides a decent fixed return for the fixed period and relatively safer as compared to other forms of investment products.  

Specially, in current interest rate scenario, the fixed deposit rates are quite lucrative (8.5 – 10%).  However, it is likely that rates will go down further, so it is advisable to lock-in your interest rates if you want to invest in FD for longer term.

Banks are required to deduct Tax (TDS) @ 10 % if the interest earned on FD exceeds Rs 10,000 in a financial year. This could have a significant impact on the amount received at maturity.

I am sure that everyone wants to save tax and to avoid any deduction from their hard earned money. Most common queries, I received from friends are:

  1. My Bank is deducting TDS on FD, can’t I avoid it?
  2. Do I really need to pay tax on Bank FD Interest?
  3. My total income in under taxable limit, how should I get the refund back?

 Let me try to explain answer to above queries in addition to few ways to avoid TDS on Interest on fixed deposits.

 

1. Interest earned on Bank FD is Taxable

First of all, you should know that any interest earned on bank FD is taxable & should be included in your taxable income.

Even if the TDS has not been deducted by bank, you need to include the income from fixed deposits in your tax returns and pay the tax as per your tax slab.

If the TDS has been deducted by bank @ 10 %, you still need to include the income from fixed deposits in your tax returns and claim the TDS amount in appropriate column. For e.g if you are already in 30% tax slab, any interest earned on FD will also be attract 30% tax (even if tax is deducted by banks @10%).

 

2. Tax Deducted by Banks (TDS)

Banks are required to deduct TDS at 10%, if the total interest earned on your fixed deposits in a bank branch exceeds Rs 10,000 in a financial year.

Make sure than your PAN is updated with the Bank otherwise TDS will be deducted @ 20%.

TDS is also applicable on the interest accrued. At the end of fiscal year (31-Mar), tax is deducted on the interest accrued on the fixed deposit(s), even if this interest has not been paid / credited. Check your 26AS to ensure that tax is deducted and paid by bank before you file your return.   

Read my post- How to check Form 26AS

 

3. So, is there any way to avoid TDS?  

Yes.  An investor can save TDS by following ways: 

a. By submitting Form 15G/15H

If the investor’s estimated total income is below exemption limit, he can submit Form 15G, then the bank would not deduct any TDS from the interest earned. For senior citizens, the requisite form is 15H to avoid TDS.

You need to fill this form at the beginning of each financial year providing details of fixed deposits and submit to your bank.

Read my post  –  Who can submit Form 15G / Form 15H to avoid TDS on Bank FD Interest.

 

b. By splitting FD across Banks & branches

Another easy way adopted by many investors to avoid TDS, is to split their FD across banks so that the interest earned does not exceed the Rs 10,000 limits.

You can also spread FD across various branches so that the interest earned in a particular branch is below Rs 10,000 in a financial year.

However, please note that this will just avoid TDS. You will still need to include this while filing your income tax returns for the year. So, if your income is taxable, then you will need to pay taxes according to your income tax slab.

Suppose you want to invest Rs 1.5 lacs in FD giving 10% interest. If you open FD in one bank / branch, the interest earned per annum will be Rs 15000 and TDS will be deducted. However, you split your investment across 2 banks – Rs 75000 each, then the interest earned on each FD will be Rs 7500 only which will be below TDS limit and no TDS will be deducted by Banks.

tds-on-fd

See in the screenshot above, just by booking FD in different branches, the TDS is not deducted even total interest in more than 10000 (but less than 10000 per branch)

c. by Timing the FD

You can also avoid TDS by timing your FD so that the interest earned in one financial year does not exceed Rs 10000.

Suppose you want to invest Rs 1.5 lacs in FD giving 10% interest. If you start this FD for 1 year on 01-April-2013, then the interest earned in one financial year (April 13 – March 14) will be Rs 15000 and TDS will be deducted.

However, if you open this FD in Oct 13, then the interest will be split in 2 financial years (Oct13-Mar14 & Apr14-Sep15) and no TDS will be deducted.

 

4. How to get TDS refund.

If your bank has deducted tax on the interest earned and your tax liability is NIL , then you can claim refund by filing your income tax return. Check your form 26AS to ensure that tax is deducted and paid by bank before you file your return.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please ask in our Wealth18.com forum

http://wealth18.com/forum/index.php

About Vivek Jain

Vivek is a Chartered Accountant with 13+ years of Global Experience. He loves to write about Personal Finance, Wealth Management, Taxation etc.

284 comments

  1. Beneficial advice

  2. I have doubts about your point 3(b). I might be wrong but I don’t think splitting FD accounts in different branches of the same bank will save you from TDS deduction. Splitting FDs in different banks does. Can you please check and confirm ? Thanks a lot.

    • Hi Rohit,

      If you see the screenshot in Point 3(b), the total interest is more than Rs 10000, but no TDS is deducted as it is split across different branches.

      • About splitting FDs across branches of same bank, it is found that some banks follow the practice of Rs. 10,000/- interest per branch criteria while others club interest earned across all branches to to arrive at the figure of Rs. 10,000/-.

        So far as I know, it has to be per branch of a bank.

        Which one of the above is correct practice.

        Regards

        • Ideally it is per branch. But now some banks are clubbing together on customer basis across all branches as it is easy to consolidate date.

        • bandhu
          now all banks have core banking and by means of pan card and customer id the can detect each and evry deposit so no means to split fd.
          eithe u hav to deposit in defirrnt bank with no pan card upto 100000
          or pay tds.

  3. Hi,

    Thanks for this article, found it very useful. I have one doubt regarding point 3(c). I started a FD on 3rd March 2014 for 1 year, which will mature on 3rd March 2015. Now I want to start another FD in May 2014 for 1 year. So will the previous FD be taxable in 2014-15 and May 2014 FD will be taxable in 2015-16. or both will be taxable in 2014-15. Please clarify. Thanks in advance.

    • Hi Hemant, Ideally the FD interest is taxed on accrual basis. So, on 31 March every year, bank will calculate Interest on all open FD and should deduct TDS.

      FY 2013-2014 : First FD interest accrued till March 2014
      FY 2014-2015 : First FD interest accrued during April 2014 – 3 Mar 2015 PLUS 2nd FD interet from May 2014 – Mar 2015
      FY 2015-2016 : 2nd FD interest from April 2015 to May 2015

      Check your Form 26AS every April to make sure that Interest is credit & if any TDS is deducted by Bank

  4. Hello,
    I have one query, My gross salary for F.Y.2014-15 was: 247396. I had shown investment of 72657 under section 80C. i Also have a fixed deposit. Interest earned on F.D. for this year was 11237. So TDS deducted for 1124. How can I get the refund. Do I need to file Return?

  5. Thank you Vivek.

  6. Hi,
    My total gross salary to say F.Y 2013-2014 is 1,50,000. Interest earned on FD was 12567 and TDS deducted was Rs 1256.7. Now how I get the refund. Whr and when do I file the return?

  7. Hi Vivek,

    i have an NRE rupee account account. as of now my status is Resident Indian (temporarily), i am having query – for this financial year my status would be RI

    in this case do my invested NRE Fixed deposit’s interest become taxable ?

    if above is true then person outside india (NRE) doesn’t attract tax on FD’s interest and attract tax when he/she is in india and RI.

    kindly let know if any solution to avoid tax. please note FD’s are invested as NRE FD’s.

    • Hi Chint,
      Are you travelling out of India for Short term assignemnts or are you employed outside India??
      How are you calculating your Residential status in a financial year ?

      • Thanks Vivek,

        I normally travel for long term (1+ years). i am calculating NRI / RI status based on below

        1) 180 days outside India or not
        2) when returning India during end of financial year one shall not be staying more than 60 days in remaining days of financial year

        Regardless of above i may be staying more than 180 days in India during 2014-2015 financial year. hence RI for 14-15

        i have recently invested NRE FD (for 2 years in April 2014), considering above i would be RI for this year. and would need to travel in April 2015 (for 1 year) hence NRI for next financial year (15-16).

        Please can you advise, what shall i do to keep my FD as NRE only considering above fluctuation in resident status ?

        • Hi Chint, As your residential status is changing every year, it is little bit complex to advise.
          Ideally, you need to notify bank, when you are resident, so that they can mark the FD as Resident.

          However, even if you donot notify them, they will continue it as NRE FD and tax free.

          • Thanks Vivek. i am fine till bank keeps it as NRE FD. Was concerned if bank changes my account status to RI, that may implicitly convert my FD’s as RI FD as against NRE FD.

          • Bank will not change the status unless you communicate to them.

  8. Hi I have a doubt here.
    If I keep FD of 1.5 Lakhs interest earned is say 15k for 1 year. But if i keep for only 1 month it wil be 1.7K will that be considered for TDS?

    • Hi Kiran,

      Only Interest earned will be considered for TDS. SO if you keep FD for 1 month & earn Rs 1700, no TDS will be deducted by bank. Bank will only deduct TDS if the Interest earned is more than Rs 10000.

  9. Hi, as you have said that banks check the open F.D’s to calculate the TDS on interest on F.D’s. Now my question is if I make 3 – 4 F.D’s in one financial year and all the 4 F.D’s are maturing before 31st march. Also the interest calculated on all F.D’s does not cross 10000. Then do I need to submit the 15G form or anything else to the bank?

    • If the total interest for that year is not mroe than Rs 10000, then YOU DONOT need to submit Form 15G. No TDS will be deducted by bank.

  10. I have done a FD of Rs.4,00,000 on 31.05.14 at SBI for 35 month on 9% . I did it in my wife name & PAN .

    She is not engaged in any other income. Do the bank will still deduct 10% or she has to submit 15 G.

    Please suggest.

    • Hi Somon,

      Yes, the bank will deduct TDS as the Interest per year is more than Rs 10000.

      1) As she have no other income, she should submit Form 15G to the bank to avoid TDS.

      2) Even if TDS is deducted, she can file IT returns & claim refund.

    • my wife has agrl. income about Rs.15000 per annum. She has no other income. She has deposited Rs. 1,40,000 in a bank. Interest exceeded Rs.10,000. TDS deducted by bank. Today i.e 09-08-2014 only known that bank has deducted TDS. What is process to get refund. Pls. suggest …

      Rajendra

  11. hello,
    i booked 3 FD for one year 10 days
    1. 50000/- on 4th April 2014
    2. 50000/- on 7th April 2014
    3. 50000/- on 22nd May 2014
    Now i am going to submit 15G foam, but i am confused, should i have to submit this Foam again in next year before FD time completed or i have to submit this only for 2014-15 financial year.

    • You need to submit Form 15G only for FY 2014 – 2015. As next year, your interest will be less than Rs 10000, no TDS is due so no Form 15G is needed.

  12. Dear Sir,

    I want to invest 10000 in Tax Saving FD for one year ,will Bank deduct TDS on interest.

    Thanks ,
    Sagar

    • If you invest Rs 10000 in FD, your interest will not exceed Rs 1000, so no TDS is applicable.

      TDS will only be deducted when Interest is more than Rs 10000 (not the investment)

  13. Dear Sir/Madam,

    My total taxable income is 7,40,000 which is under 20% tax slab.

    Now I got 10 lakhs rupees from equity shares (from long term investment) and I would like invest the same in fixed deposit.

    What are best investment options so that I can save maximum tax.

    Thanks in advance for your answer

  14. Gnana Sundara Guru

    I have FD of nearly 90000 in a bank account which fetches me approx Rs 8,000 p.a of interest and hence no TDS is presently deducted. Now if i invest 10,000 per month in an RD, the total interest payment (FD+RD) in the financial year will be exceed Rs 10,000 p.a. In this case, will TDS be deducted from FD?

  15. Hi, my mother is a housewife and she has no earning other than interests which she will earn from FD. Now we are planning to deposit 20lakhs Rs in FD A/c. Will it deduct TDS and is it required to file return in her case.

    • Hi Ruchi, It will also depend on the age of your mother.

      You can submit Form 15G/H to avoid TDS . Read the article below.

      http://wealth18.com/who-can-submit-form-15g-15h-to-avoid-tds-on-bank-fd/

      • Hi Vivek thanks for replying. She is 50 years old .I assume that if I’m opening FD A/C in bank with 9% interest compounded annually it will amount to 1.8lakhs(approx) so that is below the limit of 2 lakhs.However recently she has earned interest of approx 80k form Savings Bank A/C. Will that be accountable.

        Will she be still be in a condition to submit 15G.My main aim is to avoid TDS.

        • Hi Ruchi, You have to see the total interest in 1 financial year. If for FY 2014-2015, the interest is less than Rs 2 lakh, then you can submit Form 15G

  16. In case an employer (school) does not have a TAN number , then an employee(teacher) while filling Schedule 1 of ITR-1 what does fill under column TAN No ?

    • If employer is deducting TDS then TAN is must, otherwise there will not be any TDS deducted by employer.

      • Thank you . Firstly ,Employer (school) is not deducting TDS. Secondly ,yearly salary of employee is about Rs 1,00,000/- which is not taxable . Yet the employee wishes to file ITR-1 . How does the employee do so ?

  17. Hi ,

    If deposit 25000 in form of FD @ 9.75 ROI each month starting from Aug’14 for the next 1 year on my mothers name ,will i get the advantage of TDS exemption on intrest amount

    Please answer clearly with the example as i am new to this.

    • Hi Mohan, If you deposit Rs 25000 as FD with 9.75% interest, you will get approx Rs 1800 in FY 2014-2015
      So Bank will not deduct TDS.

      However, all FD interest is taxable and should be included in “Income from other Sources”

      Whether your mother has any other income ? There will be no tax upto Income of Rs 2 lakh….

  18. Hi Vivek,
    If the interest earned from FDs is less tha Rs 10,000 , then banks do not deduct TDS, but whether this income is subjected to tax?

  19. Iam getting Rs 8000 interest on FDs and Iam in 20% tax slab but adding this interest, income goes to 30% slab. Whether the tax is to be calculated at 20% or 30%.

    • Hi Shilpa, You need to add this under “Income from other sources” and then calculate tax on total income.

      You donot need to calculate tax separately on FD Interest.

  20. I have taken Tax saver FD 5 years back. Invested 50,000. On Maturity i got an interest of 26000. There was no deduction from bank. My Query is, will the interest taxable? Kindly clarify.

  21. Abhishek Pramanik

    Good Knowledge.. Income tax in India is now become a tough task to understand.. It is surprising that the tax payers are not having much knowledge about the deductions mode..

  22. I have a query! Let us suppose that i have booked a FD in any bank for short term:
    Amount = 180000
    Interest = 10%
    Term = 6 -Month
    From April – Sept
    Interest =9000 (Non – Taxable)
    And On maturity if i withdraw it. (FD Account closed)

    And if the same amount FD in same bank, if i booked for Next 6 month then the again i will get the 9000/ interest.
    So, Bank will deduct TDS on it or not?

    Total Interest = 18000/
    But first FD was closed.

    • Bank will deduct TDS irrespective of number of FD. As long as total FD interest 9across all FD in same branch) is more than Rs 10000, Bank will deduct TDS.

  23. I am in 20%slab . bank has cut 10 TDS on around 32000 rs (interest on FD)
    1) which form I should use ITR-1 or II
    2) which challan I should file?
    thanks, I find yr website very informative.

  24. idbi bank has already deducted the TDS for fixed deposit and less amount has been credited for Monthly interest scheme.This month’s interest is the first time as last month I made the fd whose monthly interest is arround Rs.4000 per month.I haven’t fill up the form 15G yet.If i submit the form now,will they refund the TDS to my savings account.

    • Hi Debashis, They will not refund you the TDS.
      However, if you submit Form 15G now, they will not deduct TDS on future interest payment.
      You can always file your Income Tax return and claim the refund if excess tax is deducted.

  25. I’ve withdrawn PF this year(within three years). Whether this amount is taxable and which ITR Form is to be followed if it is taxable!!

  26. Hello Vivek,
    Greetings
    In the last FY 2013-2014, approximately Rs 81,000 was deducted as TDS from my commissions payable by different companies for bringing export orders for them. One company deducted (January 2014) Rs 6,900 as TDS for the same reason but not reflecting in 26AS as of today. This company say they paid (deducted TDS) to Income tax buy yet to be posted online and this takes time. Since my income tax filing is due in this month, my question is whether can I add this Rs 6900 to my already uploaded Rs 81,000 in calculating refund from income tax. Mine is a proprietorship export consultancy. I don’t have to pay tax again as my TDS is more than the tax that I ought to pay after calculations. I don’t want to loose this Rs 6,900. If my question is not clear please reply so that I can clarify before your answer.

    Many thanks for your time.
    Raj

    • If they have paid in Jan 2014, that should have been reflected around April next quarter) .
      It seems that either they have not paid the TDS to govt or not filed their TDS returns.

      If you claim TDS which is not reflected in 26AS, there are chances that you will get demand notice for that amount. As that TDS is not showing in IT dept website.

      So you need to contact your client to get TDS certificate before you claim that amount.

      • Sir
        Thank you for the reply.
        They told me about 2 weeks ago that they paid TDS late and paid interest also. I believe they paid TDS late to Govt.

        1. Can I wait for a few more weeks for this credit to appear in my 26AS. (As I said earlier, my TDS is more than the tax I need to pay and as such need not pay further tax before the deadline.)

        or

        2. Can I go ahead with tax filing including this amount believing them. By the time Govt. process my refund after a few months, this 6,900 would be showing in my 26AS.

        3. Can you tell me if the refund is done by software automatically based on PAN # or an officer will go through each application and process refund manually.

        4. Can I take advantage of this TDS next FY 2014-2015.

        • 1) It is better to file return before due date.
          2) You can claim this 6900 and claim refudn
          3) Most refunds is done automatically by software. But high amount may be scruitnised
          4) Youc an carry forward the TDS next year. There is a column in the Form. But that will be applicable when you can see that TDS is deducted in advance. So not applicable in your case.

  27. Hi Vivek,

    Need a clarification regarding Form 26AS. Total amount paid / credited shows an amount Rs.33,066 on which 3306.60 has been deducted and shown under tax deducted for FD interest. My understanding is that there is an exemption of Rs. 10,000/- on interest income from FD. If its true, how much should I consider for calculating the tax. Will it be Rs. 33,066 or Rs. 26,033 (33,066 minus 10,000 exemption). My income falls in 30% bracket. Please clarify.

    Thanks
    Vishal

    • Sorry, please read as Rs. 23,066/- instead of Rs. 26,033

    • Hi Vishal, There is no exemption for FD Interest.
      u/s 80TTA, exemption for Rs 10000 is for SAVING BANK Interest only.

      You need to show Rs 33066 as Income from other sources and claim TDS of Rs 23306 in TDS section.

      You may need to pay additional tax based on Tax calculation

      • Thanks Vivek. This time I paid a lot of tax, however in future would like to avoid or minimize the tax liability at least on Fixed Deposit. Need your advice now

        If I transfer some funds into my wife’s account and then she opens up a FD in her name, does that saves tax. She is a housewife but have a PAN, so we can submit Form 15G /H and since her income will not fall in taxable bracket, I believe that will save tax, however not sure if it is within tax laws.

        Please suggest.

        Thanks
        Vishal

        • Hi Vishal,

          If you just transfer money to your wife without consideration, then any income earned on that will be clubbed in your income. So you need to include that in your income & pay tax accordingly.

          Alternative, she can borrow money from you against any jewellery etc.. then she can use that money & any interest earned will be taxable in her hands.

          • hi
            i did the same ie, transfer money from my account to my wife account and opened fd from her account. now how can i avoid her earnings clubbed to my income ?

            do i need to prepare any document like she borrowed money from me against any jewellery or something like that? and where i have to update that details ?

            awaiting for your answer

          • Hi Sam, Yes if you can create that document and keep with you in case of any scrutiny. You are not required to submit to anyone now.

  28. I went through ur replies.Thanks for the very useful informations

  29. Hello Vivek,
    I have 5,00,001 fixed deposit in post office which is opened on april 2008 it got matured on april 2014. How much money i will receive when i take my money after maturity?as they said 5% bonus when matured. will i get interest from may 2014 to till now.
    Thanks in Advance.

    • Hi Ratna, PO Fixed deposit is normally for 5 years. But you said it was for 6 years ?

      Can you please check which Investment it is and what is the duration. It should also show the Interest rate.

  30. Hi,

    Have some clarification regarding FD deposit.

    My mother doesn’t earn. For her expenses and other, am gifting here a sum of 3 lack and she is depositing that amount in FD. So does the interest received is taxable ? Or how it works ?

  31. I sold my house i have 20 Lakhs in hand.can you help me how to plan the investments..

    • Hi Usha,

      Investment will depend on your time horizon, goals, risk taking ability, your age, tax status etc.

      So please let me know,

      1) Have you considered capitalgain tax at time of sellin ghouse
      2) Other details as asked above – age, tax slab, goals, time horizon etc..

  32. Sucharita Banerjee

    Dear Vivek,

    I found your post quite informative. I come in 30% tax bracket but I wish to avoid tax on interest income from fixed deposit. At present, splitting FD’s in different banks wont help as they can be tracked by PAN.
    More over I want to know what % of income I need to keep liquid money in FDs. Im not into property investments or mutual funds so what other sources I can explore to save on tax part.

  33. Hi Sir,

    I have a FD of Rs 5,00,000. Let’s say it is @ 10%.
    At maturity, interest earned = Rs 50,000 and Bank will deduct Rs 5,000 as TDS.
    So, net interest earned = Rs 45,000

    My Income falls in 20% slab
    Now, my queries are –
    1) Income earned from other sources will be = 45,000 or 50,000 ?
    2) Will there be extra 20% deduction on the above amount ?

    Thanks in advance

    • The Interest from other sources will be Rs 50000 and then you can claim TDs deducted under Incoem Tax paid Section – 5000

      You will have to calculate tax on yoru total Incoem. In this case, the Tax may be say 50000*20% = Rs 10000

      As TDs of Rs 5000 is already deducted, you need to pay rest Rs 5000 as Self assessment tax.

  34. Hi Vivek,

    I heard from one of my uncle that their are some FD’s i.e which are government schemes in the banks, if we deposit the money for some x period of time irrespective of the interest earned their wouldn’t be any tax deduction. I heard the period to be around 5 years or some where near it.Is it true? The TDS would only be deducted if we take out the money before the maturity date.

    Thank You.
    Nanda.

    • Hi Nanda,

      On all Bank FD , TDS will be deducted if the total interest in 1 year is more than Rs 10000.

      There are Tax Saving FD ( duration 5 years) – where if you invest, you will get tax deduction under 80C. This is similar to investing in PPF, PF, ELSS fund etc. where you get deduction u/s 80C upto Rs 1 lakh.

      But Interest on such FD is taxable.

      • Hi,

        I am trying to do this FD on my nephews name i.e a gift deed. She doesn’t have a bank account.I was advised by my uncle that i open an FD under my name and put her as a nominee.I am an NRI, would that be ok, because i was once told by the bank official that the TDS would be deducted if i have more than one FD’s ? They said for the 1st FD i wouldn’t be charged, this is something i am not aware of.

        Thank You.

  35. Sir,

    Require clarification regarding FD.

    Having deposited Rs.3,25,000/- ( maturity one year ) every month from Jan – Dec @ 9.00 interest per annum,in the same bank submitted form 15G, so as to receive interest every month on maturity. For the past two years TDS was not deducted, received the interest without deductions. On 06th August 2014 amount of Rs.18,450/- was deducted from the interest, even the Bank Manager could not give convincing explanations

    My question is :

    a. Bank Manager should have know the IT Act 26AS (Tax is deducted & paid by Bank before you file your return)
    b. IT or the Bank should have inform TDS deductions On FD
    b. Can file IT returns & claim refund ( which in an article came to know), never filed IT return before.
    c. I am unemployed, the amount accumulated by Principle Amount & compounded interest over an period of 18 Years,
    so to have regular interst on monthly basis as source
    d. Is there any clause to claim TDS deduction or minimize the TDS

    Regards

    Mahesh

    • Hi Mahesh,
      Pls clarify

      1) How much have you invested? whether it is total of 325000 ?
      2) When this FD was made
      3) you said – so as to receive interest every month on maturity ? Whether interestis paiud every month or on maturity ??
      4) in which bank the FD was made? whether it is co-operative bank ?

      — In any cae, if you donot have any other income and no tax is payable, you can always file return & claim TDS refund. Show the Income from FD under Income from othr sources & claim the TDS as Tax deducted & paid.

      You can file return in ITR 1. See how you can file IT return on IT dept website for FREE

      http://wealth18.com/how-to-file-income-tax-return-itr-online-efiling-india/

  36. Hi Vivek,

    I made FD of Rs350,000/- in Aug-13 (for 1 year).
    Bank has charged TDS of Rs.2000/- (approx) on 31-MAr-14.
    Shalll I need to show the total accured instrest as on 31-Mar-14 (corresponding to this FD), as a part of my income – when Iam filing the income tax returns for FY 2013-14 OR I can show it as my income in next FY.
    I am falling in 30% income tax slab.

    • hi Anil, if the bank has deducted TDS, then it is better to show that portion of Interest as Incoem in FY 2013-2014 returns & claim that TDS.

  37. Hi Vivek,
    I initially filed made a mistake in filing my returns and hence re-filed it again. In this case I have to send only the revised ITR-V to Income Tax Department or both (ITR-V of incorrect returns + revised ITR-V).

  38. sir,
    my mom is retired teacher(60 yr). her pension per yr around 100000 . if she done fd 10,00,000 in different branches(90,000 each 11 branches of diff banks) is it tax return will be file. is it tds deduct. deposit will be from august 2014 for 2 yr
    thanks
    with regards
    kishan

  39. sir,
    my mom is retire teacher (60 yr) .her pension 1,00,000 yearly.
    If she done 10,00,000 as fd in different branches of banks( 11 fd each of rs 90,000)
    1) is it any tds deduct,
    2) is it she file tax

    deposits from aug 2014 onwards for 2 to 3 years.
    thanks
    kishan

  40. hello..thanx for ur wonderful advice..i am student at present..i dont have any income.although i am getting scholarship..i want to invest near 1 lac rupees. which i have saved till now..what are the scopes and outcome to do so in order to avoid TDS or any sorts of deduction from interest.??plzzz….reply

    • If you have no income above Rs 2 lakh, you can submit Form 15G to the bank and bank will not deduct any TDS on Interest. If you want to invest for a long term, you can consider doing monthly SIP of Rs 1000 in Equity mutual funds.

  41. Dear Vivek,

    I had posted this query last time also but the system i guess didnot take it. I want to know to save taxes on the FD can i take FD in the name of my mother as a joint person or as a nominee so that i dont have to pay taxes on it. plz reply.

    • Hi Venkat,
      You can gift money to your mother and she can make FD in her name. You can become 2nd holder or nominee.
      As long as she is First holder, the income will be taxable in her hands.

  42. Mrityunjoy Choudhury

    Dear Vivek thank you so much for your very useful article. Before reading this article I was bit confused about this particular section. Even my bank’s manager was unable to help me understand me, he was all just confusing me. But hats off to you sir. So please help in my situation so that I will be able to clear the last doubt. I am going to buy a FD in Andhra Bank for 90K for 1 year.The interest rate is 9%. So my interest earned will be 8100. So that means I am eligible for exemption in tax deduction right? Just help me in this question. Thanks to you Vivek again. Take care.

    • Hi Mrityunjoy, If your total Interest earned in that bank branch is less than Rs 10000 then no TDS will be deducted.
      So in your case, as the Interest is just Rs 8100 , NO TDS will be deducted.

  43. Hi Mr.vivek
    I am working overseas and i have converted around 20 lakh from overseas into my india saving account i want to make a fd @9 % with a bank can i use form 15h and pay no tax.i have NO other income in india .will the tax exemption be applicable to me .please help on this matter

  44. Sir,

    How much amount’s FD can be done on 31st August @ 9% interest.

    • Hi Deepak, If you make FD for Rs 185000, then FD interest earned till March 2015, will be less than Rs 10000 and NO Tds will be deducted.

  45. Hello Sir,
    my mother aged 68 wants to open FD for rs 2700000.00 Got money by selling her fathers property . she has’nt have pan card and does’nt have any other source of income. i want to know that is there any way for any tax exemption.
    thanks
    with regards
    WILSON

    • Hi Wilson, As making an FD of Rs 27 lakh, will generate an income of Rs 2.5 lakh a year.
      You should apply for PAN card at least.

      After that you can submit form 15g/h to the bank so that no TDS is deducted. You can also file returns & claim refund of ant tax deducted.

  46. Hi Vivek,

    Thank you very much for the info on the Income taxes. As suggested by you i had checked the Form 26AS and found that 10% deduction has been made by my bank on FD which is a joint between me and my father. Father is a retired pensioner. I fall in 30% taxes bracket. I ahve not shown them in my income tax. Now there are two things:

    1. how do i correct my income tax what i have declared for this year.
    2. What is the meaning and ramification of holding joint account or either or survivor or nominee or the first name etc on the income tax?

    • Hi Venkat, TDS would have been deducted against PAN of first holder. Can u pls check against which PAN, TDS is deducted.

      1) You can always file revised return
      2) It is better to make your Father as First holder, so that Interest earned will be treated as his income.

      • thank you so much Vivek. I appreciate your dedication in answering all the queries. God Bless.

      • Vivek,

        Thanks for your guidance. I have to file revised return as i had not declared the bank FD interest. But since i filed late in august 1st week is it possibel to file the revised IT?

        • Hi Venkat, If you have not filed return on time, you cannot revise it.

          Additionally, you can also pay additional tax applicable on FD interest under that Assessment year.

  47. Hi Vivek,

    I am in 30% tax slab & want to invest an amount of 3 Lac. But i want to save tax at a non risky investment. For FD there is almost nil invetsment benefit(approx 6% on FD if tax deduction is also considrede)

    1. is income fund a better option than FD? as i could earn more but with higher time frame of investment. Do you have in mind some other less risky options where i can save tax also & earn slightly better than FD

    2. Someone in bank suggetsed that if i invest my FD maturity amount into income fund – i can avoid tax.?? Is that possible or was he fooling us?

    Let me know thnks in advance

  48. hi Vivek,
    thanks for the article. i have a question for you. my total income including the interest income falls in the 20% slab. but my interest income is below 10000 from FDs. can the bank still deduct TDS? will submitting tge 15G help? my brnach manager tells me, if my income from all sources is above the taxable limit, the bank will deduct TDS no matter the amount of FD interest. is this true? thanks in advance.

    • Hi, This is not correct. Bank will only deduct TDS if the Interest eanred is more than Rs 10000 in 1 year.
      So if your FD interest is less than Rs 10000, bank will not deduct TDS.
      Which bank is yours ?

  49. Hey. Good info. Hey i live in usa but my father mother live in india. I want to deposit money in FD on their names and me as beneficiary. The amount is around 90 lakhs. So the interst on 90 lakhs will be around 8 lakhs yearly at 9%. And my parents have no other income. So how much will they be taxed or if any way to avoid tax. Or if they are exempted under senior citizen law. They both 61 and 60 yrs old.

    • Hi Raman,

      1) One option is that You can open an NRE Account in your name & all NRE FD Interest in Tax free in India. But as your are US citizen, you need to include that income in your US Tax returns and pay tax there.

      2) If you want to gift them money & make FD in their name, all interest earned will be taxable in their names.
      You can split FD in name of father & mother . so 45 lakhs each under father & mother , so interest eanred will be approx 4 lakh each.
      For sr citizen, Upto Rs 3 lakh the tax is NIL.
      further, they can get deduction upto Rs 1.5 lakh by investing in 80C investments. So no tax will be required.

  50. Thanks
    It was Interesting
    Take care

  51. Hi,
    I am a pensioner and IT assesse. I have paid full tax in March 2014 for FY 2013-14. In June 2013, I have deposited my pension benefit in a band as FD for 18 months.
    My first question: Can I pay the IT on FD interest at the time of maturity? or I must the include the earned interest in every financial year and pay IT.

    My bank manager asked me to give 15G in May 2014 (without deducting TDS). I gave 15G without knowing that I am not eligible to give 15G as I am already IT assesse. In July, I have seen the entry under 15G column in 26AS form. If I pay tax for the entry in 15G column, I have to pay interest for the late payment.

    I met IT department. They ask me to request the manager to withdraw the 15G form and pay the tax at the time of maturity of FD. But manager asked me to pay the tax now and file the IT return.

    Please guide me to go in the correct way.

    • Hi, You should revise your Income Tax return for FY 2013-2014 (AY 2014-2015) and include the FD Interest as “Income from Other sources”
      Once done, calculate the revised tax and pay the balance tax as self assessment tax.

  52. i m planning to invest rs.300000 in fd spiliting in two banks (1.5+1.5 lacs) in this time august or september 2014.
    please suggest me right timing and
    will the tds deduct?

    • If you invest Rs 1.5 lakh in FD in Sep 2014, (assuming 9% interest), the interest for FY 2014-2015 will be less than Rs 10000, so no TDS will be deducted in this year.

      However,if you keep the FD for full year next year in FY 2015-2016, then Interest will be more than Rs 10K and TDS will be deducted.

  53. Hi Vivek,

    Actullay after my husband death i recieved 8lakhs from his company. i want to go for FD for my kid future but i my worry about tds deduction. My son is 16years only how i can manage this, please suggest me as i m having saving accounts in three banks and i m a housewife.

  54. thanks sir for ur help…one more question.
    is it necessary a pan card no. to submit 15G form?

    • Hi Inder,

      Yes it is necessary to submit PAN for 15G. In case you fail to provide your PAN number to the bank, the bank will deduct TDS @ 20 percent against the applicable rate of 10 percent even if you have submitted form no. 15G and 15H.

  55. Hello Vivek,

    My mother who is 60 yrs of age has several FDs in SB an BOB.

    Her income earned as interest on FDs does go upto 5 to 10 lakhs in both banks.

    She also has no other income besides the interest that she gets on FDs.

    How could we save her from TDS and get refunds on TDS deducted previously.

    What documents do we need to have before we file IT returns.

    Thank you,
    Flora

    • Hi, As her income is more than taxable limit, she cannot submit form 15G/H.
      So , if interest earned is over Rs 10000, TDS will be deducted by bank.

      She need to file returns & show Interest as Income from other sources. She can then claim the TDS deducted.
      Any additional tax payable needs to be paid. If there is a refund, it can be claimed.

      You just need to file returns in ITR 1. You need bank statements to check the amount of Interest eanred in that year.

      You can also check , how much TDS is deducted by checking her Form 26AS. See the link below –

      http://wealth18.com/check-or-view-your-tax-credit-form-26as-online/

  56. Mrityunjoy Choudhury

    hi Vivek, I have just one question. If I open a RD account for the interest rate 8.75% for 10 years, then my maturity value is 10,15,000. So my total interest gained is 3,79,000 in 10 years, which is around 37,900 yearly I guess. But as per your point if and only my interest gained is below 10k per year then only TDS is not applicable. But in my situation the interest gained per year is 37900. Bank Manager said that there is no TDS for the RD I have mentioned.So I am confused.The bank is Bank of India. Please guide me. Thank you.

    • Hi Mritunjoy, There is NO TDS on Recurring Deposit. TDS is applicable for FD & not RD.

      But just because TDS is not applicable on RD, it doesnot mean that Interest on RD is tax free. You need to show the Interest in your Income cTax return under “Income from other sources” and calculate tax accordingly.

  57. Hello,

    I think we can not avoid to give the tax in FD.I think all the methods are just for delaying the tax on FD.
    See if i am earning 10 lakh per annum and my tax slab is 20%. So in salary suppose i am giving 80000 in tax in a year.

    If i have FD in 5 banks.
    1. Interest earned: 7000
    2. Interest earned: 8000
    3. Interest earned: 7000
    4. Interest earned: 8000
    5. Interest earned: 5000
    TOTAL: 35000.
    Bank will not deduct any single penny from your account.

    But when i will file ITR, i have to show my FD’s and i have to give 20% on 35000. CORRECT ?
    Then what is the point of splitting the FD in all the banks.

    One Question : If i will not show my FD on ITR then what will happen, As my all Bank accounts have my valid PIN number?

    • Hi pawan,

      You are correct, but many people think that if TDS is not deducted, they donot have to pay. Interest on FD needs to be shown under Income from other sources & tax neds to be paid.

      However, many people whose income is below taxable limit, or no tax is payable, they donot want to go through hassle of filing return & claim TDS refund. So they prefer that no TDS is deducted.

      But in your case, if you are already paying income tax, there is no point on splitting FD to avoid TDS.

      In case you donot show the Interest, that may be picked by the Income tax officer and penalty can be levied. it is better to show the Interest & pay correct taxes.

      • Is thr any option ao tht we dnt hv to pay income tax. Like PPF. Or life insurance
        What if i will buy gold and sell it when needed does i hv to pay tax whn i will sell it???
        Or can u suggest any such acheme in which tax can be avoided.

        • You cannot avoid much tax if you have income :)

          • Vivek, I know that if i have income i have to pay tax.

            But I am asking about the money which i got after tax deduction, it’s my salary.
            So, My question is, I am in 20% slab. Now i want to invest my earned salary in such a scheme that after gaining interest from that scheme i don’t have to pay the tax.
            As per my knowledge PPF is such a scheme in which, after maturity you don’t have to pay Tax. But the limit of PPF is only 1.5 lakh per year.

            Like wise i want to know more schemes.

          • Hi Pawan, so you are looking for Tax free Investment options. There are not many.

            You can invest in PPF, Tax free bonds, Savings Account (upto Rs 10000 Interest)

            Equity mutual funds (tax free after 1 year of holding),

            Arbitrage funds (tax free after 1 year of holding) –

            You can invest in name of your parents. Gift them money and they can invest in their name in FD.

      • Hi vivek,
        Thanks for clarifying. I have one more question:
        Suppose a person having no income and he has FD’s in Banks. interest earned from FD’s are around 4 lakhs.
        So as it’s more than 2.5 Lakh,so IT should be imposed. But if that person opens his PPF account of 1.5 Lakh then No Tax should be imposed on him. because 2.5 is the exemption + 80C exception is 1.5 Lakh.
        Is my observations are CORRECT.
        If yes then what document should be provided to bank(apart from 15h or 15g) so that No TDS should be deducted,(how bank knows that PPF that the person is having PPF account in post office/or in other bank) And As per law if income is below 5 lakh it is optional to file ITR, so that person don’t want to file ITR.

        Please clarify.

  58. hi sir
    i want to make fd 500000/- from dated 01/10/2014 @ 9.00% for one year.
    interest earn during financial year 2014-15 above 10000 rs.then tds deducted.
    but i submit form no 15h or 15g dated 02/10/2014 bank will be accept or not accept form .kindly tell me

  59. My father will retire after 1 month and how can we fixed deposit to earn good monthly interest from his
    retirement amount,any help if you can do will be appreciated

  60. Hi Vivek,
    Firstly I would like to say that your knowledge is very good. Now I have a query that, my granny has a FD with private investor company which calculate interest as 13% we had invested 1 lac for 4 year which were doubled and now we have invested the renew amount for which the interest will be received around 14 k. So the main query is will it be taxable bcoz my granny has no other income? And if taxable how do we get the refund?

    • Hi Vrutti,

      In case of private company FD, TDS is deducted if the Interest is more than Rs 5000 in a year.
      But, as your granny has income below limit fo Rs 2.50 lakhs, she can submit Form 15G/H to the company, so that no TDS will be deducted.

      Even for last years, you should ask for TDS certificate from the company. If TDS is deducted, then you can file the returns & claim the refund.

      You can also check if the TDS is deposited by the company on behalf of your granny, by checking the Form 26AS (based on your granny’s PAN) . see below:

      http://wealth18.com/check-or-view-your-tax-credit-form-26as-online/

      • Hi Vivek,
        Thanks for the details. But my granny doesnot have a PAN No as she is less educated and not very much known about this she dont have Proof to make Pan as we dont know her birth date she is apprx more than 60. How will it work ? Can you suggest any way for this? And also as you suggested that I should give the form 15 G/H to company will they accept it as the investment is renewed 1 year back which was earlier for 4 year?

        • Hi Vrutti, You cannot submit 15G/H for previous year. Check with the company whether they have deducted TDS? and what is the amount of TDS?

  61. Hi Vivek,
    I would also like to know if the Fd is passed to me as I am the Nominee, as we dont want to with draw it even after 4 year. Will I be taxable for the amount recieved after my granny and I am not in taxable slab?

    • Hi Vrutti,

      If the FD is name of Granny, any interest earned will be her income.
      If you are nominee, after her he amount will be paid to you by bank.

      If you choose to keep that in FD form, Bank will create a new FD in your name and any Interest earned thereon will be taxable in your hands.

  62. Hi Vivek,
    I would also like to know are there any benefit of Short Term Deposit , if done for 6 months with a Principle amount of 50000. Will it be beneficial I have to make Total Income of 4 lacs in 2 Year is it possible by Fd with a Salary of 10k expenses are not made from salary?
    Pls suggest some risk free investment mode?

    • Hi Vrutti,

      If you deposit the amount Rs. 10000 monthly in a Recurring Deposit, at 8.75% interest rate per annum , then after 2 years your maturity amount will be Rs. Rs 2.62 lakhs.

  63. Hi Vivek,
    Thanks for the Details.But my granny doesnt have the Pan NO and Doesnot have the relevant proof to make the same. So what can be done in that case? Suggest me some risk free investment to make income of 4 lacs in 3 years in Salary of 10k . Please give the solution for the Tds problem?

    • Hi Vrutti, You can submit form 15g/h to the company so that no TDS is deducted, but you need PAN for that as well. So you should apply for PAN for your granny.

      The risk free investment for 3 years will be RD. You can open RD. the interest rate will be approx 8-9%. However, that will not achieve your target of 4 lakhs in 3 years. You need to either revise your target or increase your savings

  64. hi Vivek,

    i am tax payee in the slab of 10% i have 5 bank accounts and they will provide me around Rs 45000 interest 9000 each. 3 of them are on wife name and 2 of mine. since no TDS deduction by the banks as per the law.
    so am i doing wrong because i am not declaring this money anywhere ?

    • Hi Vijay,

      Yes you are doing wrong. Even if TDS is not dedcuted, you need to show that Interest as your Income when filing Income tax return & calculate tax accordingly.

      • thanks vivek.
        my wife is house wife so the interest on her account need not be included in my ITR declaration so may i earn Rs 27000 from wife accounts rs 9000 from each bank .
        is anything wrong in this ?

        • Hi Vijay, if you have given money to your wife and she has invested in FD & earned income. Such income will be clubbed under yours as Income tax has clubbing provisions.

          Alternatively, you can give her money against something (advance against jewellery etc)But in case of Income tax scrutiny, you need to prove the situation.

          • As per my understanding there is no provision to earn more then rs 10000 by our money from banks means operating with multiple banks for the tax payee is not the solution to make out more money as interest.

          • Hi Vinay. can u pls explain your query.

  65. Hello Vivek,

    do you have any article regarding GIFT , and gift related tax.
    Suppose my father gives me 3 -5 Lakh rupees , CASH payment.
    And i make FD of those rupees,( i have to declare it on ITR and i have to pay tax on interest received on those FD). Will IT dept can question to me that from where you got this much of rupees? in that case what to do?

    One more thing: If i did not make FD, just save that amount in my saving bank account(no declaration to be done in ITR), But IT dept can ask me for such a big amount deposited in my account, in this case also what to be done.
    Plz clarify. Is it treated as a gift and what is the limit of that gifts received from relatives?

    • Hi Pawan,

      There is no limit on amount , your father can give you gift. There is no tax.
      But the problem will be if he gives you in cash as you need to deposit that cash in your bank account. This will be reflected as major transaction under your PAN. IT dept can ask you for details in case of scrutiny. As long as you can show from where the money legitimately came, there should not be an issue.

      Whether you make FD or keep in saving account, the Interest needs to be disclosed in Income from other sources. For saving bank interest, you can claim deduction upto Rs 10000 u/s 80TTA

  66. Dear Vivek,

    As i am employee of a private company, my company is deducting Tax on monthly basis.
    Now if i have FD in which i have earned 8000 in one financial year say 2014-15. (As this is lower than 10K so no TDS will be deducted by bank).

    So, if i will not declare in company payroll then no Tax on 20000 will be deducted.

    But if i want to declare it in ITR then how IT dept. will deduct this tax? Is it from my bank account?
    In this case how the tax on 8000 will be given to IT dept. ?

    Regards,
    Pawan Pant

    • Hi Pawan,

      You need to file Income tax return even if TDs is deducted by your company / bank. Otherwise there are high chances that you will get Compliance notice from Income tax department.

      When you file your return, you need to show income as per Form 16 & other income like Bank Interest, Exempt dividends etc, Share Income etc, then calculate tax on total Income.

      Then claim the TDS amount. If the TDs deducted is les than tax payable, you need to submit the tax to the income tax dept by filling a challan form as Self asseesment tax paid.

      You can then claim this tax paid in the IT form.

      http://wealth18.com/how-to-file-income-tax-return-itr-online-efiling-india/

  67. Dear sir, I am a NRE for the last 14 years, and planning to return for good after 2 years. Next month I would like to open an FD of 15 lakhs, for two years. Is TDS applicable for the interest?

  68. Dear Mr Jain, I have a SBI saving account. How can I know online if it is NRE/NRI. And what is the difference between NRE and NRI?

    Below I what I see online as description of my account.
    Description: SBNCHQ-GEN-PUB-IND-NONRURAL

    • Hi Syed,

      When did you open your account? before becoming an NRI or after? Looks like a normal Savings Account.
      If you are an NRI, you can open following 3 type of accounts
      http://wealth18.com/nri-bank-accounts-nre-nro-fcnr/

      You need to open a NRE Account with any bank in India by giving your passport & VISA proof that you are living outside India. Once the NRE Account is opened, you can make FD in NRE Account & all Interest is Tax free.
      In NRE Account, you can only send money from Outside India.

      • I left India in nov2000, and opened the account in may2007.

        • Did you opened the account in India when you were physically there? Does it say NRE Account on your Passbook / bank statement or chequebook.
          If not, then most likely it is normal savings Account.

          • Dear Sir, thanks for your reply

            I opened the account durin my visit during 2007, and it does not say NRI on the passbook or bank account.

            Can you please help me understand the bellow:
            1. For the FD of 15 lakh, when will I get the interest.will it be monthly/quarterly/at meturity?
            2. After all the expenses I still will have about 20 K IRS, please advice any scheme where I can invest for better returns.
            Thanks in advance.

          • Hi Syed,

            In case of NRE FD, you can choose to get Interest on quarterly basis or at time of maturity.
            In case of Normal Indian FD, you can choose to get Interest on monthly /quarterly basis or at time of maturity.

            2) Not clear about your 2nd query. Pls explain. For 15 lakh FD, you will get approx. 135000 Interest in a year, which is below taxable limit.

          • Dear Mr. Jain,

            Thanks for your professional advise earlier, and at present I am in contact with HDFC to open an NRE account, which I believe will be done in 15 days.

            Please advice how many NRE FD’s I can have on one NRE account, because I wish to split my fd of INR 15,00,000 in 15 fds of INR 1,00,000 each. The Idea is to be on safe side if at all i need some money, so that i can break 1or2 fd instead of breaking the fd of INR 15,00,000.

            Awaiting your reply.

            Thanks

          • Hi Syed, you are thinking on right lines. You can make as many FD as you want. There is no restriction.
            You should make FD of 1 lakh each as you said so that it is helpful when you break them in case of emergency.

            Also see NRE FD Rates Comparison

            http://wealth18.com/nre-fixed-deposit-rates-comparison-nre-fd-rates/

  69. Hello,

    I get foriegn remittance for software work and through paypal or wire. Sometimes I incur this amount in my mother’s name not going above 2 lakhs

    Is it possible submit form 15G for tax exemption for interest on FD in her name.

    Thank you.

  70. First of all thanks for various articles i found them informative thanks for them ..
    can you plz clarify my folowing doubts :
    About Gift Money :
    * What is the limit of gift amounts received from parent to children ?

    * if father/mother gives money to his/her children in check or in cash and that money is deposited by son/daughter to make FD will that income from interest considered of the son/daughter or of Father/Mother who out of them need to show it in there taxable income parents or son/daughter….?

    *which one of them is considered as income of son/daughter money tranferred/given via check or cash ?

    * if mother who is paying tax gives around 3 lakh rs either lumpsum or in parts to her son/daughter who ar not working and they in turn invest it in FD then will that considered income of son/daughter or Mother who need to show that money , interest as well as recieved money, in his/her taxable income mother or children plz clear my doubt …?

    *and does FD splitting method is legal or not like if i club two methods Timings one and FD splitting
    will that be legal…

    thank you plz reply…

    • Hi Rajiv,
      There is no limit on the gift amount from parents to children.
      If the children are minor, then any direct interest earned on that amount will be treated as income of the parent.
      But if the children are major, then it will be treated as Income of Children.

      If the amount is large (more than Rs 50000) then it is better to transfer by cheque.

      There is nothing wrong in splitting the FD or timing as it will just avoid TDS. That will still be an Income & needs to be shown under Income from other sources.

      • Thanks for clarifying i want to ask you few more thing like ..plz tell me :

        *are you sure gift money transferred from parent to child via check is termed as income of child (major) ??
        as i have read that if parent tranfer money to child(major) and he /she in turn invest them in FDs that income from interest of FD will fall under parents tax income…am i right in this point …?

        *plz clarify income from FD interest made from gift money .. fall under whose income ?

        if it falls under Children income then do still parent need to show that interest income in there taxable income …should parent have to show or child have to show…that in income from other sources…..?

        * and money tranferred via check /online or cash to child (major).. bank acc like more then 3 lakhs in given FY ..will that amount fall under taxable income of the child even if child have no other income…? do he need to pay tax on that gift amount… ….? and fill income tax as per my understanding parent already filled tax for that amont so child need not to fill again tax for that amount .as parent have transferred tax deducted money to child account….am i right….?

        *and if apart from parent i got money like 1 lakh during same financial year from some other source ..then will this 1 lakh plus 3 lakh gift amount make the child eligible for income tax…on rs 4 lakh or child won’t be eligible for tax as income is 1 lakh only …and 3 lakh is gift amount from which tax already deducted…am i getting it right …?

        plz clarify this as i will plan money investment on the basis of these info…

        thanks and regards
        Rajiv

        • Hi Rajiv,

          Actual Gift money is a Capital receipt is not treated as Income for anyone. Any Interest earned on that amount is Income.

          If parent transfer money to the major child, and they make the FD, then any FD interest will be income of Child.
          Child has to show the FD interest income in his returns (not parent return).

          So if you gift your child Rs 3 lakh – it is not taxable
          If your child get another 1 lakh, depending on the nature – it may be taxable.
          Any interest earned will be taxable.

  71. I have one Fixed Deposit for Rs. 50000.00 with State Bank of India ubder Tax Savings Scheme, I have got rebate under
    80C of IT rule in the opening year but Bank has deducted TDS for Rs.59.00 & Rs.525.00 in FY-2012-13 & 2013-14 on accrued interest payable less than Rs.10000.00 in both the year. As per Bank’s rule TDS will be deducted on interest payable above Rs.10000.00. So ask through you whether TDS deduction will be justified or there are separate instruction for Tax savings Fixed Deposit . Please clarify

    • Hi Manik, There are no separate TDS rules for Tax Saving FD.
      If the overall Interest from that bank is less than Rs 10000 in a year, they should not deduct TDS. You can visit branch & ask the reason for TDS deduction.

  72. Hi Vivek,

    Can you please clarify on the below
    If I have a FD of 22 Lakhs and getting 9% Interest on the same Rs 1,98,000 and I don’t have any other Income for the year does I need to pay tax and Can I claim back the TDS deducted by bank

    • Hi Vinod, if you do not have any other income & TDS is deducted by bank, you can always file return & claim refund. In case of refund, it is better to file return online & processing of refund is faster.

      You can also submit Form 15G to the bank to avoid any TDS deduction. Read the post below on who can submit form 15G
      http://wealth18.com/who-can-submit-form-15g-15h-to-avoid-tds-on-bank-fd/

      However in that case, the IT department may ask about the lumpsum amount of Rs 22 lakh which you have despite any other income ?

      • Hi Vivek,

        I am an NRI and I have some money in in my NRI FD and I will get some End of service benefit from here as I am planning to come back to India. I think I need to change from NRI FD to normal FD once I am back in India. Is there is time limit to change the FD from NRI FD to Normal FD.

        • Hi Vinod, Normally you need to inform your bank within 6 months of change in residential status.
          Please note that once you become resident & convert the NRE FD into normal FD, any interest will be taxable.

  73. Hello sir. infact of producing form 15 g TDs has been cut from my mom FD… Plz tell me the procedure of claiming the TDs amount my self…

    • Hi Anu, If TDS is already deducted, you need to file Income Tax return & then claim refund. it is better to file return online as the refunds are processed much faster.

  74. sir,i have no income .i have made a fd of rs 30Lakh for 1year intrest 9.50 per in bank.can i fill 15h/g
    can any intrest limit for submit of 15h/g.

  75. Helo vivek. In my father acount he was open 3 fd of 1 lakh each for 1yr at 9 % interst rate.the 1 policy made on 2 june 2013 and the rest two made on 5 sep 2013 nw all 3 matured but when i checked i get the 107760 on 1st and on rest two 108236 each he told me that 20% tax dedcted .my father has no other source of incme. How could i get bck.as he nt updated pan in bnk.and how the deducted amount is 2 much in first one

    • If no PAN is given to the bank, TDS will be deducted @ 20%.

      You need to apply for PAN, then take TDS certificate from Bank, file return & claim refund.

      Even for TDS exemption of Form 15G/H, you need to have PAN card.

  76. Your article is very good. I have a question. The interest earned in a year from SBI was Rs. 8412.00, still they have deducted Rs.1047 as income tax. I never had this idea and deposited my IT return of the current year well in time without including this income as well as this tax. I am in 30% tax slab. Please let me know what should I do?

    • Hi, Ideally the TDs is deducted if total interest in 1 year is more than Rs 10000 ( total across all FD). First check in which year the TDS was deducted.

      Check in Form 26AS ( http://wealth18.com/check-or-view-your-tax-credit-form-26as-online/

      If the TDS is deducted in FY 2013-2014 ( for which you have already filed return) – you can revise your return & claim the refund if any.

      If the TDS is deducted in FY 2014-2015, you can claim when filing next year return.

  77. Mr Vivek,
    This month and next month I am expecting some funds for which there will be TDS deduction of 10 %. This TDS will be about Rs 1,00,000. I can file income tax returns only by next March 2015 for the FY 2014-2015. After the filing, income tax department shall take another 4-6 months to process the application and refund me. Is there any way I can get this TDS amount refunded to me at an early date. My TDS deductions are more than the actual tax I pay.

    Thank you very much.
    Raj

    • Hi raj, There is no option to get the tax refund early. If your TDS amount is Rs 1 lakh, which means you have Interest income of Rs 10 lakh.

      On Rs 10 lakh, even after getting deduction u/s 80C of Rs 1 lakh – your taxable income will be Rs 9 Lakh.
      tax on Rs 9 lakh will be approx. Rs 105000.

      So it seems that no refund will be due. (unless I am missing any other deductions you are claiming )

      • That’s true. My taxable income will be much less than Rs 9 lakhs. Because there are so much expenses for me which have to be deducted for arriving the total taxable income. Also Sir Rs 10 lakh is not interest income alone. Rs 10 lakhs includes commissions earned by me for my consultancy job. Companies deduct TDS and pay my commission. I have a proprietorship firm. Actual tax payable by me would be much less.

        • Ok. In that case, there is no option to avoid TDS. and it will be refunded only after filing of returns.

          For eg. for FY 2013-2014 , I filed return in July 2014 and got the refund in Sep 2014.

  78. Dear sir greeting, please tell me how can save TDS on my interest, actually i have my own only one house and i am going sell me this house and when till i mean if 1 or two years i will not buy another house so this amount i want to keep in bank and band and govt must deduct TDS because if i put my money whole one years because house sell amount near around 25 lakhs so if i make fd in any bank for 1 year s it will get near around 225000 Rupees interest for 1 year so how can i avoid TDS because this is my house sell amount and i did not earned from business please reply me i will very thankfull to you thanks

  79. R/S, i am qareeb i want to know can continue my NRI A/c because before i was worked in overseas and i was open in India NRE account but before a two years i was came finaly from overseas but still my NRE account running because i was keeped some amount in my NRE account and before a 6 – 7 years i was gave some large amount to my relative as a loan so now he returned me and i want to keep this amount in my NRE account because as you know on NRE account not tax deducted so i can deposit my local money in my NRE account, shall i can use any of my friend NRO account and from his NRO account can transfer in my NRE account and it will be leagley please reply me. thanking you

    • Hi Qareeb, It is not advisable to keep the NRE account running after you become Resident in India. Also, there will be admin issues in terms of your address in NRE Account – Is it still overseas address ?

      For transferring money from NRO to NRE, you need to get CA certificate regarding all taxes have been paid on money in NRO account.

  80. Hello,

    I am a 30 yr housewife and do not have a pan card. My account was opened with help of voter id card. So will bank deduct TDS @20% even if interest on my FDs is below Rs.10,000 or it will be deducted at 20% only if interest is more than 10,000.

    • Hi Ritu, If your PAN card details are not updated in the bank, they will deduct TDS @ 20% if the interest amount in 1 year is more than Rs 10000.

      You need to submit your PAN card details to the bank.

  81. Hello Vivek,

    I am lucky to have found your forum and helpful advises here. Since I away from India for long, I am not clear on the Income tax in India.

    We have rented out our apartment and have rental income 3.50 lakhs annually in NRO. The bank has been deducting TDS. Can I file ITR 2013-2014 now? which ITR form? Can I submit 15 G form? We are paying LIC premiums so as tax exemption, can I submit 26AS to Bank.
    Please advise. Thanks

    • Hi Shalini,

      1) You can file the return for FY 2012-2013 ( AY 2013-2014) as well as FY 2013-2014 ( AY 2014-2015).
      2) You cannot submit Form 15G/H for rental Income .It is just for Bank Interest TDS for Residents only.
      3) Form 26AS is for you to know the TDS deducted by various people. No need to submit it to anyone.

      Income from House property – You can claim 30% standard deduction u/s 24 as well as full amount of Interest paid on this home loan.

      Now, please let me know on which amount & how much TDS is deducted ?
      You can file return showing your Income from rent & Interest and claim deduction for Insurance payment. Calculate the tax & take credit of TDs deducted.
      Any excess TDS, you can claim refund.

      You can file return in ITR 1 if you have only 1 house property. Else you need to file in ITR 2.

  82. Hello Vivek,
    i wanna spend about 5000000 in fixed deposit. Plz guide me where to invest it & suggest me some tricks to avoid or reduce the TDS. As I Belong to rural area and not much educated so i don’t have much knowledge about it. Plz guide me. I’ll be very thankful to you.

    • Hi Aman, on FD of rs 50 lakh, the interest will be approx. Rs 4.5 lakh. even if you split FD in different banks to avoid TDS, the interest is still taxable. You will need to show that Income from other sources & pay taxes accordingly.

  83. Hi,

    I have FD’s with net interest earned is Rs 9000(<10000) in a financial year. Bank will not deduct any TDS since it is less than 10000. But still is it taxable? Interest earned through this is less than 10000 will it be taxable or not? Do i need to put this in my ITR as additional income and pay tax?

  84. Hi,

    All the information are very useful here. Thanks for this discussion and your answers.

    I have one question. If I have a FD for 5 years, do i need to show interest income every year in my tax return or i will show it at the end of the 5th year when the FD will mature?

    Could you please clarify.

    Thanks and Regards,
    Prasanta

  85. Hi Guyzz,

    Whats my doubt is i have put FD for only two months and my total interest is is 2200 for that two months, will they deduct TDS for that interest???

    • No in that case TDS will not be deducted. TD will only be deducted if total interest earned in an year is Rs 10000 or more.

  86. Sir, My father turned 60 this june. I want to invest 2 lakhs in senior citizen FD? How much TDS will be deducted? Can it be avoided? What if I invest 1-1 Lakh in two different banks?

  87. Hi I quit my job in october 2013. Currently I have certain savings on which tds is being deducted by sbi. As the limit have increased beyond 10000. If I submit 15g stating 0 income since currently I am unemployed. Will tds be deducted or . The savings I have is my income for the financial year.please throw some light on this part whether for current financial year I will have to pay tax or not

    • Hi Vijay, How much is your interest income?
      You can submit Form 15G to the bank stating that Income is below taxable limit. As Interest earned is also an Income so donot write 0.

  88. hi can anyone guide me here .. i have around 10lakhs for investment and i want fixed returns on monthly basis and so how much should i invest for getting monthly returns of around 9 to 10,000 in fixed deposit or any other investment schemes …. and wat will be the TDS for that investment…… thanks in advance …. :) :)

    • Hi Dev, what is your current taxable income and in which tax slab are you in ?
      For how long you want to keep the investment?

  89. If I invest 20000 per month in RD for 10 year, then also no TDS applicable for any financial year or maturity????

    • Hi Prashant, TDS is not applicable for RD irrespective of amount. However, any interest earned is still taxable and you should to show under Income from other sources. and pay the taxes accordingly.

  90. I just wanted to know whether banks deduct tax on interest monthly or annually on 31 march

    Thanks

  91. sir , my gross salary is around 32k ,i would like to know whether rd or saving plus account will be more useful for me for short term period e.g. 1 year

    • if you are investing for 1 year, then you should go with FD / RD . if you have lumpsum amount to invest, you can go for FD. If you want to invest monthly, you can choose RD.

  92. Mrityunjoy Choudhury

    1st of all hats off to you sir for giving solution to so many questions asked by people like me. really you have been very helpful. You have covered maximum topics about income tax which are circling in the mind of us. Thanks again sir. So today I have a new question. My father is a retired govt. employee. And he is getting pension which doesn’t fall under income tax. But he has a TATAAIA policy which he is going to surrender in the next month. The amount will be around 1,35,000 which will be transferred to his bank a/c. the sum assured was 1.1 lac & was opened in 2011. And it was a single premium paying policy for 1 lac. So my question is is he suppose to give TDS for that surrender amount which will be credited to his bank a/c through NEFT? Thank you.

    • Hi,

      Could you please let me know

      1) Name of TATA AIA policy?
      2) Did he claimed tax benefit u/s 80C of premium paid in 2011?

      Also, note that normally on such receipts TDS is not deducted. if the income is taxable, you need to add that as income in IT returns & then pay tax accordingly.

  93. Hi I have a query
    I fall in 20% tax slab. My q is does bank only deduct 10% on interest earned from FD? What about the other 10% deduction? As per my knowledge the other 10% would get deducted by Income Tax dept or how does it work? Kindly clarify.

    • You need to show the interest income as Income from other sources in your Income Tax return. Need to calculate the tax & claim the TDS deducted by bank.
      Then you need to pay the balance tax. Income tax dept doesnot deduct any Tax. You need to calculate the tax & pay the tax.

      • Thank you so much sir.

        I would really appreciate if you can kindly clarify this with an example please.

        Regards
        Raj

        • Hi Raj, If your total income from salaries is say 800000, then employer would have deducted 85000 as TDS. You will be in 20% slab.
          Now if you have FD interest of rs 1 lakh , Bank will have deducted TDS of Rs 10000 (10% only)

          But, when filing the IT return, you need to show as follows:
          Income from Salaries – 800000
          Income from other sources – 1000000
          TOTAL – 900000

          Tax on 900000 = Rs 105000

          TDS deducted by employer – 85000
          TDS deducted by Bank – 10000

          BALANCE Tax to be paid – 10000

          You need to pay the Rs 10000 amount as Tax by filling challan (online / offline)

  94. One more q pls.

    Though I fall in 20% tax slab. Can i submit Form 15G and avoid TDS?

    Thanks in advance

  95. my interest on Fixed Deposit exceeds the SD by Rs.1,20,000/- for the Fy 2014-15. can I submit form 15 H to avoid TDS. I am doing Business and had already Paid Advance Taxes and have TDS certificates for Rs.80,000/- being the Business Proceeds Income/Commission. Please advise as to what should I do now?

    • Form 15G can be submitted by Resident, non-senior citizen investor if following conditions are fulfilled:
      1) The final tax on his estimated total income should be NIL ; and
      2) The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab

      Otherwise, you can always file Income Tax return & claim the TDS deducted.

  96. Hi,

    I want to open a FD of Rs 1 Lac for 5 years at 8.75%.Want to clarify few things:-

    1-How much TDS will be duducted.Below is the breakup of financial year interest earned:-
    2014-2015 3430.06
    2015-2016 9371.73
    2016-2017 10176.81
    2017-2018 11118.69
    2018-2019 12124.61
    2019-2020 7932.10

    2- Do i need to Submit 15G form to save TDS(My income is taxable)?If Yes,When?
    3- Do i need to change the amount to save TDS ?(the interest earned in financial year is less than 10K)and then submitting 15G form filling can be avoided.

    • 1. if the current rule does not change, the TDS will be deducted in 2016-2017, 2017-2018, 2018-2019 ( years in which Interest is more than Rs 10000

      2. You can submit Form 15H only if following conditions are fulfilled:
      a) The final tax on his estimated total income should be NIL ; and
      b) The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab

      http://wealth18.com/who-can-submit-form-15g-15h-to-avoid-tds-on-bank-fd/

      3) Even if the Interest earned in less than Rs 10000, you need to show the Interest as Income from other sources in your tax return. and pay taxes accordingly.

  97. Hi Vivek Sir,
    Can you please provide the govt. website link through which I can see previous year tax returns and the amount I paid to govt. and if I pay extra in tax and also submitted the tax proofs what is the way to get the extra amount back in my bank account.

    Please help.

    Thanks,
    Zeeshan Khan

    • Hi Zeeshan, If you have submitted the tax returns online, then you can see them in your Income tax portal login. If you have submitted offline, then you should have physical stamped acknowledgement of return.

      When you submit return, you need to claim the taxes paid & claim refund if any. The refund is then either directly credited to your bank account or cheque sent.

  98. Hi,
    we have a FD 1= 55000 in April 2014, and FD 2 =60000 in Nov-2014.
    Is any tax is deducted on my F.D interest ?

    plz clear my doubt

    Thanks & Regards,
    Gyanendra

    • Based on the FD interest rate, please calculate the interest accrued till 31-Mar-2015
      if it is more than Rs 10000, then bank will deduct TDS @ 10%

      Whether bank deduct TDS or not, FD interest is taxable and needs to be included in your total income under Income from Other sources.

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