TDS deduction on fixed deposits (FD) occurs when the interest earned on an FD exceeds Rs.40,000 in a financial year. In such cases, banks automatically deduct 10% TDS (Tax Deducted at Source) from the interest. For instance, if the interest is Rs.45,000, the bank deducts Rs.4,500 as TDS, and you would ideally receive Rs.40,500. The deducted TDS is sent to the income tax department. If your total income is below the taxable limit, you could claim a refund by filing an income tax return. Understanding TDS on FD is crucial for effective financial planning.
TDS deduction on FD occurs when the annual interest exceeds Rs.40,000
Banks automatically deduct 10% TDS on interest earned from a fixed deposit
TDS on fixed deposits ensures that a portion of your interest income goes to the income tax department
If your total income is below the taxable limit, you could claim a refund for the TDS deducted on FD
Always check if TDS on FD applies to your interest income to avoid surprises
Plan your finances considering the impact of TDS deduction on fixed deposit interest
Understanding TDS in fixed deposit could help you manage your tax liabilities effectively