Among the most often used investment choices in India are fixed deposits, or FDs. They promise assured returns, are safe, simple to open. Many people, meanwhile, are not sure whether or not interest from FD taxable income counts.
Let us grasp everything in straightforward language.
Is FD Taxable’s interest taxable?
Indeed, FD’s interest qualifies as taxable in India. Fixed deposit interest adds to your overall income and is taxed based on your income slab.
For instance, if your income falls in the 20% tax slab and you get ₹30,000 as interest from FD in a year, ₹6,000 (20%) will be deducted as tax.
FD Interest Tax Deducted: How?
If FD interest crosses a specific threshold, banks subtract TDS (Tax Deducted at Source).
TDS Guidelines
TDS is 10% if your annual FD interest runs above:
- ₹40,000 (for everyday people)
- ₹50,000 (for elderly people)
TDS is 20% if you fail to supply PAN.
How can one prevent TDS on FD interest?
Only if your whole income is less the taxable limit will you be able to avoid TDS.
Procedure:
- For those under 60, send Form 15G; for senior citizens, send Form 15H.
- Send the form first thing in the financial year.
- It advises the bank against deducting TDS.
Where in ITR would one show FD interest?
Your ITR has to show the interest from FD taxable income under “Income from Other Sources”.
- Claim TDS already deducted with Form 26AS.
- Should your slab exceed TDS rate, pay additional taxes.
Advice on Tax Saving on FD Interest
- Using 5-year tax-saving FD under Section 80C, maximum ₹1.5 lakh
- Invest under the name of a lower tax slab family member.
- Share FDs among banks to keep interest below the TDS limit.
- For maturity, combine smart timing with joint FDs.
Typical Mistakes to Avoid
- Ignoring FD Interest While Making ITR
- Thinking TDS is the last tax (not!).
- Returning incorrect declaration forms
- Not looking over Form 26AS prior to submitting returns
