Fixed DepositTerm Deposit. Copyright 2. 01. Kollam District Co operative Bank Website Designed and Maintained by Centre for Development of Imaging Technology C Dit. How are fixed deposits taxed Heres everything you need to know. Many of us who maintain fixed deposits FDs in banks do so out of habit, and often neglect to consider the income we earn from them while calculating our income for the year. This is a fundamental error that can eventually lead to a notice from the Income Tax department. Treat interest from FDs just as you would treat income from any other source, for example, income from rental property. Make sure you declare your FD income conscientiously under Income from Other Sources while filing your tax returns. Form 2. 6AS includes a record of all the TDS payments deducted on your fixed deposits. Remember, FDs will also be taxed at the same rate as the rest of your gross income. This means, if you are in the 2. FDs. Arent taxes already deducted on my FDs TDS or Tax Deducted at Source is the Income Tax departments way of automating tax collection, to an extent. The tax on interest from any FD is paid partially via TDS deducted by the bank and the rest is paid as self assessment tax by the individual. Banks deduct TDS on interest only if the interest amount of the FD is greater than Rs 1. The rate of TDS deducted by banks is 1. PAN number is available with the bank. If the bank doesnt have your PAN in its records, TDS is deducted at 2. If your total income is below the minimum tax slab 1. What Was The Purpose Of The Bracero Program During Ww2 here. TDS on FD interest, which is deducted by banks, can be recovered by claiming a refund on the TDS amount at the time of tax filing. Alternately, you can submit Form 1. G to the bank declaring that since your taxable income for the year is below the minimum tax slab, the bank should not deduct TDS on your FD Interest. Form No. 15G or 15H should be submitted at the beginning of the year so as to avoid a situation where bank has already deducted the tax before you submit the form. Senior citizens are also exempt from paying TDS on FD interest as a special concession by the IT department. They need to submit Form 1. H to ensure they are not charged TDS on their FDs. Individuals in higher tax brackets 2. Self Assessment Tax over and above the TDS deducted on their interest income. Lets understand this with an example. Ashok belongs to the 3. KmylZPzOXTI/maxresdefault.jpg' alt='Sbi Form 15g For Fixed Deposits' title='Sbi Form 15g For Fixed Deposits' />FD of Rs 1. So, the interest he earns on the FD for the current financial year is Rs 9. Remember, banks tax FDs at 1. Now, Ashok is liable to pay tax on the interest he earns at the same tax rate as he pays for his gross income. Hence total tax Ashok needs to pay on interest earned 3. Die Reparatur Der Armbanduhr Pdf'>Die Reparatur Der Armbanduhr Pdf. How To Avoid TDS Tax Deducted At Source On Bank Fixed Deposits The bank is liable to deduct TDS at 10 per cent on the interest earned, as per FD rates fixed. Rs 9. 0,0. 00 Rs 2. The bank deducts TDS of 1. Rs 9. 0,0. 00 Rs 9,0. Therefore, the balance tax payable by Ashok as self assessment tax is 2. Rs 1. 8,0. 00. Common queries with FDs Are tax saver FDs treated differently The short answer to this question No. Wd9srLlUIg/VSNA2cIGwSI/AAAAAAAADHc/xxeQ6V595u8/s1600/15g.gif' alt='Form 15G For Fixed Deposits' title='Form 15G For Fixed Deposits' />The only additional benefit of a tax saver FD over a regular FD is that the original amount you invest in a tax saver FD is exempt from taxes and can be claimed as a deduction under Section 8. C while filing returns. The interest income that is generated from such FDs is subject to the same tax rules as any other regular FD. Australian Work Abroad Programs'>Australian Work Abroad Programs. When should you pay tax on interest income Banks deduct TDS on interest as and when interest is accrued, not when interest is paid out. This TDS deducted reflects in your Form 2. AS automatically. Hence to prevent confusion in Form 2. AS, it is advisable to pay the self assessment tax on your interest income if applicable on a yearly basis, and not when the FD matures. Theres another compelling argument in favour of yearly tax payments on interest income. When you declare interest income as a lump sum amount when your FD matures, there is a possibility that you will be bumped up to a higher tax slab and pay higher taxes overall. To prevent this, simply pay the tax accrued on your interest income on an annual basis. K. R. Gupta is chairman,www. He retired as member, Central Board of Direct Taxes, Ministry of Finance. He has more than 5.