Tips to save on TDS for FD returns!

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TDS stands for Tax Deduction at Source. TDS applies to the various incomes received, such as salaries, interest received, etc. which is deducted when revenue is generated rather than at a later date.Generally, the person who is making the payment is responsible for deducting the tax and depositing the same with the government so that the person deducts a certain percentage of the fee before making payment in full to the receiver of the amount. The tax they charge on Fixed Deposit Interest Income is calculated on an individual, and the burden they charge depends on the slab rate on which they fall.

How can an individual save TDS on Fixed Deposit?

Interest incurred on a fixed deposit is taxable at an individual’s slab rate along with applicable surcharges/cess. If an investor submits Form 15G stating that he has no taxable income, the bank will not deduct any TDS on the interest earned.

For senior citizens, the requisite form to avoid TDS is 15H. You can also save TDS by timing your fixed deposit in such a way that interest for any financial years does not exceed Rs. 10,000. For example, if an individual wants to invest Rs. 2,00,000 and the bank interest rates range upto 10%, he will get an income of Rs. 20,000. Since this figure exceeds Rs. 10,000, the bank will deduct TDS on it. But, if you divide the fixed deposit into three different banks, the individual will get an interest of Rs. 3333 from each bank. As each amount is below the threshold limit, Rs. 10,000, the bank will not deduct TDS on the same.

You can open your fixed deposit in a post office branch instead of a bank. No TDS is deducted on the post office fixed deposit. Deposits made for a tenure of five years are eligible for tax benefits under Section 80C of the Income Tax Act of India,1961.

Few easy ways to avoid TDS on fixed deposits

Fixed Deposits are one of the most favored investment instruments in India. This can be called a financial investment as the investor invests a lump sum of money for a fixed tenure at a pre-agreed interest rate. Various fixed deposit schemes are prevailing in the market where an individual can avoid TDS. The investor can choose one according to his needs and requirements.

Regular Fixed Deposit: In this type of scheme, the tenure is fixed for a period ranging from 1week to 10years. If the bank has deducted TDS, but you are liable for a lower rate of tax, then you can claim the amount back as a refund in your Income Tax return from the Income Tax Department.

Also, if you make the fixed deposit amount closer to the end of the financial year or middle of the year, TDS gets distributed in two years. In such a case, if in one year the interest rate falls below 10,000, then it is not liable for TDS.

Tax Saving Fixed Deposit: This scheme has a compulsory lock-in of 5years, and the principal amount cannot be withdrawn before completion of the lock-in period. This fixed deposit scheme saves Income Tax.

Recurring Deposit Scheme: This scheme helps an investor to regularly deposit a fixed amount every month for a fixed period and with a pre-determined interest rate. The corpus keeps on increasing over some time. Interest in Recurring Deposit is fully taxable as per your slab. However, for senior citizens, Recurring Deposit up to Rs. Fifty thousand per annum are exempted.

No doubt, Fixed Deposit works as the best form of investment. However, let us look at the key points which we must keep in mind while selecting a Fixed Deposit Investment Plan for ourselves

Interest rate Calculation: Different range of banks vary in terms of their schemes. It would help if you made sure whether the interest rate is being calculated on a monthly, quarterly, half-yearly, or yearly basis.

Healthy Interest Rate: Being an informed investor pays well. An investor can reinvest the amount of interest earned. I am thereby enjoying the FD corpus. On the other hand, the other option being is that a person can receive regular payouts every month.

Penalty: Many times, a period of emergency can crop up. There is some bank that can charge a sentence or a charge in case of premature of fixed deposit breakout. In such a case, investors have an option to look out for banks that offer low penalty rates.

Perk to save tax on Fixed Deposit

This is the most sorted after option that can be used. It is called as “Splitting of an FD. “ The investor can open a fixed deposit in a bank and open another fixed deposit in another bank. In this case, both of them will be treated as separated. As a result, in such an instance, we can split the corpus.

Let us make it more clear by giving an illustration. Tax is deducted when the income increases Rs10,000.

How can we save ourselves? Let us look at this example :

Let us assume; Miss Sakshi undergoes a deposit of Rs 2 lakh for a period of 36 months at the interest rate of 8 percent p.a. on October 1, 2018. In this case, the interest earned during FY 2018-19 would be Rs 8,000 only. This will result in no TDS during FY 2018-19.

The interest earned under the fixed deposit is taxable under the head “Income from Other Sources.” The interest earned from the deposit is taxable as per the investor’s tax bracket, and therefore TDS is applicable. The interest is payable either monthly or quarterly basis and can be reinvested. To avoid TDS of the interest earned, an individual can submit form 15G to the bank.

Therefore, kick start your investment in an FD. You can start your investment from any nearby private or public sector. It is advisable to undertake detailed research and compare interest rates for different banks before making a final choice.

Tips to save on TDS for FD returns!

TDS stands for Tax Deduction at Source. TDS applies to the various incomes received, such as salaries, interest received, etc. which is deducted when revenue is generated rather than at a later date.Generally, the person who is making the payment is responsible for deducting the tax and depositing the same with the government so that the person deducts a certain percentage of the fee before making payment in full to the receiver of the amount. The tax they charge on Fixed Deposit Interest Income is calculated on an individual, and the burden they charge depends on the slab rate on which they fall.

How can an individual save TDS on Fixed Deposit?

Interest incurred on a fixed deposit is taxable at an individual’s slab rate along with applicable surcharges/cess. If an investor submits Form 15G stating that he has no taxable income, the bank will not deduct any TDS on the interest earned.

For senior citizens, the requisite form to avoid TDS is 15H. You can also save TDS by timing your fixed deposit in such a way that interest for any financial years does not exceed Rs. 10,000. For example, if an individual wants to invest Rs. 2,00,000 and the bank interest rates range upto 10%, he will get an income of Rs. 20,000. Since this figure exceeds Rs. 10,000, the bank will deduct TDS on it. But, if you divide the fixed deposit into three different banks, the individual will get an interest of Rs. 3333 from each bank. As each amount is below the threshold limit, Rs. 10,000, the bank will not deduct TDS on the same.

You can open your fixed deposit in a post office branch instead of a bank. No TDS is deducted on the post office fixed deposit. Deposits made for a tenure of five years are eligible for tax benefits under Section 80C of the Income Tax Act of India,1961.

Few easy ways to avoid TDS on fixed deposits

Fixed Deposits are one of the most favored investment instruments in India. This can be called a financial investment as the investor invests a lump sum of money for a fixed tenure at a pre-agreed interest rate. Various fixed deposit schemes are prevailing in the market where an individual can avoid TDS. The investor can choose one according to his needs and requirements.

Regular Fixed Deposit: In this type of scheme, the tenure is fixed for a period ranging from 1week to 10years. If the bank has deducted TDS, but you are liable for a lower rate of tax, then you can claim the amount back as a refund in your Income Tax return from the Income Tax Department.

Also, if you make the fixed deposit amount closer to the end of the financial year or middle of the year, TDS gets distributed in two years. In such a case, if in one year the interest rate falls below 10,000, then it is not liable for TDS.

Tax Saving Fixed Deposit: This scheme has a compulsory lock-in of 5years, and the principal amount cannot be withdrawn before completion of the lock-in period. This fixed deposit scheme saves Income Tax.

Recurring Deposit Scheme: This scheme helps an investor to regularly deposit a fixed amount every month for a fixed period and with a pre-determined interest rate. The corpus keeps on increasing over some time. Interest in Recurring Deposit is fully taxable as per your slab. However, for senior citizens, Recurring Deposit up to Rs. Fifty thousand per annum are exempted.

No doubt, Fixed Deposit works as the best form of investment. However, let us look at the key points which we must keep in mind while selecting a Fixed Deposit Investment Plan for ourselves

Interest rate Calculation: Different range of banks vary in terms of their schemes. It would help if you made sure whether the interest rate is being calculated on a monthly, quarterly, half-yearly, or yearly basis.

Healthy Interest Rate: Being an informed investor pays well. An investor can reinvest the amount of interest earned. I am thereby enjoying the FD corpus. On the other hand, the other option being is that a person can receive regular payouts every month.

Penalty: Many times, a period of emergency can crop up. There is some bank that can charge a sentence or a charge in case of premature of fixed deposit breakout. In such a case, investors have an option to look out for banks that offer low penalty rates.

Perk to save tax on Fixed Deposit

This is the most sorted after option that can be used. It is called as “Splitting of an FD. “ The investor can open a fixed deposit in a bank and open another fixed deposit in another bank. In this case, both of them will be treated as separated. As a result, in such an instance, we can split the corpus.

Let us make it more clear by giving an illustration. Tax is deducted when the income increases Rs10,000.

How can we save ourselves? Let us look at this example :

Let us assume; Miss Sakshi undergoes a deposit of Rs 2 lakh for a period of 36 months at the interest rate of 8 percent p.a. on October 1, 2018. In this case, the interest earned during FY 2018-19 would be Rs 8,000 only. This will result in no TDS during FY 2018-19.

The interest earned under the fixed deposit is taxable under the head “Income from Other Sources.” The interest earned from the deposit is taxable as per the investor’s tax bracket, and therefore TDS is applicable. The interest is payable either monthly or quarterly basis and can be reinvested. To avoid TDS of the interest earned, an individual can submit form 15G to the bank.

Therefore, kick start your investment in an FD. You can start your investment from any nearby private or public sector. It is advisable to undertake detailed research and compare interest rates for different banks before making a final choice.

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