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Should I Be Concerned About TDS on My FD Interest?

Mahesh

Mahesh Padmanabhan  | Answer  |Ask -

Tax Expert - Answered on Aug 16, 2024

Mahesh Padmanabhan has specialised in payroll, personal and corporate taxation for more than two and a half decades, enabling him to provide practical, realistic and correct advice to his clients.
He is a member of The Institute of Chartered Accountants of India and has a degree in cost accounting from the Institute of Cost Accountants of India.
He is also a qualified information systems auditor. ... more
Asked by Anonymous - Aug 14, 2024Hindi
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Interest income on fd does not exceeds 40000 yet tds 10 percent is deducted, why. Suppose fd of 25 lakh and 2 fds and for 46 days at 4.5 percent tds gets deducted at about 5500 . Pls explain this

Ans: Hi
Assuming that the interest is out of deposit with an eligible institution viz., Bank, Coop Bank & Post Office, the threshold amount is Rs. 40,000 otherwise the threshold would be Rs. 5,000. If your interest is from the eligible institutions then you will need to speak with them.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Hardik

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Tax, Mutual Fund Expert - Answered on Jul 26, 2023

Asked by Anonymous - Jul 26, 2023Hindi
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My interest on FD has been taxed at 10% TDS already . Why does it have to be taxed again during the return filing . Example of interest is 2 lakhs and TDS is 20000.
Ans: Hello there,

I understand your concern about the double taxation on your Fixed Deposit (FD) interest. Let me clarify this for you.

The Tax Deducted at Source (TDS) is a means of collecting income tax in India and is governed under the Indian Income Tax Act of 1961. When it comes to FDs, banks deduct TDS when your interest income exceeds a certain threshold in a financial year. As of now, this limit is Rs. 40,000 for non-senior citizens and Rs. 50,000 for senior citizens.

Now, coming to your question, the TDS deducted by the bank is not the final tax. It's just a part of the total income tax you're liable to pay for the year. The bank deducts TDS at 10% (if PAN is provided) on the interest earned, but your final tax liability could be at 5%, 20%, or 30% depending on your total income for the year.

So, when you file your Income Tax Return (ITR), you need to add the interest income from the FD to your total income for the year. The tax on this total income is then calculated based on the income tax slabs. If the total tax calculated is more than the TDS already deducted, you'll have to pay the difference. Conversely, if the total tax is less than the TDS, you can claim a refund.

For example, in your case, if your total income including the FD interest falls under the 30% tax bracket, you'll need to pay an additional 20% tax on the FD interest (30% total tax minus 10% TDS already deducted).

I hope this clarifies your doubt. Please consult with a tax advisor or chartered accountant for personalized advice based on your total income and tax slab.

Best regards.

..Read more

Moneywize

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on May 02, 2024

Asked by Anonymous - Apr 20, 2024Hindi
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I have submitted my Form 15 to my bank in April 2023. My income falls under the non-taxable category against interest received from bank FDs. Bank has not deducted any TDS up to September 2023 but from October 2023 they have started deducting TDS on FD interest earned by me saying that interest earned on my FDs have crossed the limit of Rs 5 lakh. Is the bank right in deducting tax citing this reason? Please enlighten me.
Ans: No, the bank is likely not right in this case. Here's why:

• Form 15G validity: A valid Form 15G submitted before April 1, 2023 is applicable for the entire financial year 2023-24 (assessment year 2024-25). This means if your income falls under the non-taxable category, the bank shouldn't deduct TDS on your FD interest for the entire year.
• TDS exemption limit: The current exemption limit for TDS on FD interest is Rs 40,000 for individuals below 60 years old, and Rs 50,000 for senior citizens (above 60 years old). There's no limit of Rs 5 lakh for TDS deduction on FD interest.

Here's what you can do:

• Reach out to your bank: Inform them that you submitted a valid Form 15G and your income falls under the non-taxable category. You can clarify the exemption limit and point out the mistake.
• Request rectification: Ask the bank to rectify the error and reverse the TDS deducted on your FD interest from October 2023 onwards.
• Seek professional help: If the bank doesn't resolve the issue, consider seeking help from a tax consultant or financial advisor. They can guide you further on how to claim a refund for the deducted TDS.

Additional points to consider:

• Ensure you have a copy of the Form 15G submission acknowledgement for your records.
• Keep a record of any communication with the bank regarding the TDS deduction.

By following these steps, you should be able to resolve the issue with the bank and avoid unnecessary TDS deduction on your FD interest.

..Read more

Moneywize

Moneywize   |174 Answers  |Ask -

Financial Planner - Answered on Jun 02, 2024

Asked by Anonymous - May 26, 2024Hindi
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I have submitted my Form 15 in April 2023 as my income is below taxable income against interest received on my bank FDs. Bank has not deducted any TDS up to September 2023 but from October 2023 started deducting TDS on FD interest saying that interest on FDs has crossed the limit of 5 lakh. So as per IT rules should TDS be deducted?
Ans: You're right. Based on IT rules, TDS on FD interest might not have been applicable in your case. Here's a breakdown:

• TDS on FD Interest: There's no TDS deduction if the total interest earned from all your FDs with a bank is less than Rs 40,000 in a financial year. This limit is Rs 50,000 for senior citizens (aged 60 years and above).
• Form 15G/15H: By submitting Form 15G (for individuals below 60) or 15H (for senior citizens) in April 2023, you declared your income to be below the taxable limit. This should have exempted TDS on FD interest for the entire financial year (April 2023 - March 2024).

Possible Reasons for TDS Deduction:

• Crossed Interest Limit Misunderstanding: The bank might have mistakenly considered the total interest earned across all your FDs for the entire financial year (April 2023 - March 2024) and deducted TDS once it exceeded Rs 40,000 (or Rs 50,000 for senior citizens) from October 2023 onwards.
• Form 15 Not Processed: There's a chance your Form 15G/15H wasn't processed correctly by the bank.

Resolving the Issue:

• Contact the Bank: Reach out to your bank's customer care or branch manager and explain the situation. Mention you submitted Form 15G/15H and your income is below the taxable limit.
• Provide Documents: If needed, share a copy of your Form 15G/15H submission proof.

The bank should investigate and potentially reverse the deducted TDS.

Additional Notes:

• It's good practice to keep a copy of any forms submitted for future reference.
• If you still face issues, consider seeking guidance from a tax consultant.

..Read more

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Dr Anshuman

Dr Anshuman Manaswi  |6 Answers  |Ask -

Plastic-Aesthetic Surgeon, Emergency Care Consultant - Answered on Dec 05, 2024

Asked by Anonymous - Dec 05, 2024Hindi
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Dear Doctor, I work as a corporate lawyer in Delhi. I’ve been considering undergoing a cosmetic procedure for my skin for some time now, but I’m feeling a bit overwhelmed by the number of surgeons available. I want to ensure that I choose someone who is experienced, as this is a big decision for me. Could you advise what I should look for when selecting a plastic-aesthetic surgeon? Are there any specific red flags I should be aware of when researching potential surgeons? I want to make sure I’m in safe hands. I’m 40 years old.
Ans: This is a beautiful question.
Before I dwell on your question, there are a few points which are very important for the patient to know.
1. You should roughly know what result you wish to have.
2. Never think of a perfect result. There is no such result.
3. You must think in terms of improvement and if you are sble to achieve more than 90% approx, it can be considred good.
4. Dont compare your results with any celebrity's result. There body structure is different, they have probably taken better care till now and importantly, the result you see on a public platform is after make up and not the real result. Some times it may be a photoshopped image
5. Let your doctor know if you have any medical history and addictions.
6. Don't go with pre concieved notion (especially if you have researched a lot online). Discuss with the doctor, listen to his/ her views and raise your concerns if any
7. Try and see some results of the doctors work (Remember, too good a result may not be the true result). Realistic result is what you should want to look at and believe.
8. Don't fall for less budget! its obvious a meticulous job needs more surgical time. This means that the doctor may charge more. Seniority also adds to the cost.
What I mean, there is a price to be paid for a good job.(whether medical or anywhere).
Now coming to the Plastic surgeon's choice.
1. Research well, but dont fall prey to only advertisement. Small and big centers, both advertise,
2. Dont fall for glamour. You are going to a surgeon. A plastic surgeon's clinic is clean but not lavish generally. At least I believe that the person coming is not a client, but a patient. A patient - Doctor relationship is more pure than a client-Professional relationship.
3. Talk and discuss with the doctor. A too busy doctor may not always be the best doctor for you. Plastic surgery is about thinking, planning and execution. A doctor who thinks aloud about your problem ( especially if ut us face, nose, breast etc) is applying his/ her knowledge for your betterment, because every oerson is different.
4. Check the resilts? Look for genuinity.
5. Be wary of arrogant, loud and boisterous people. There is a difference between confidence and fambloyence.
6. Doctors who are attached to reputed hospitals are generally good in their work.
7. A doctor who can talk about probable complications is also a doctor worth trusting.
I hope I am able to do justice to this difficult question. All the best. You can write again if you need any other clarifications.
Dr. Anshuman Manaswi

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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