Offers
Rates
V-KYC
Debit Card Related
Credit Card Related
SA Welcome Kit 
Manage Mandate(s)
Get Mini Statement
categories
Bloggers
Blog collection
Press Release
TDS On Interest On FD: Exemptions and Limits
Posted on Monday, August 28th, 2023 | By IndusInd Bank
Summary: The taxation of fixed deposit interest varies based on factors like annual income and FD returns. Choose IndusInd Bank FDs to optimise investments and secure your financial future!
Fixed Deposits (FDs) have long been the preferred option for reliable investment due to their consistency and predictable returns. If you prefer low-risk investments, you may count on FDs to give you a steady source of interest income. However, it is important to know that like most investments, the interest you earn on FDs is taxable. The Tax Deducted at Source (TDS) mechanism ensures taxes are paid on the interest income earned from FDs. Keep reading to find details of TDS on interest on FDs, and the exemptions that can help you optimise your earnings.
What Is TDS On Fixed Deposit?
When you deposit money into a fixed deposit, the interest you earn on the principal amount is considered an income source and is subject to taxation as per the Income Tax Act. Banks deduct TDS directly from the interest you earn on your FD to ensure efficient tax collection. The prevailing tax laws influence the rate of TDS, and it is calculated based on the interest that accumulates throughout the financial year.
Exemption Limit for TDS Deduction on Fixed Deposits
The table below illustrates the exemption limit for TDS deduction on FDs:
| TDS Is Not Deducted | When your interest earnings from all FDs with a bank remain below Rs 40,000 in a year. This limit rises to Rs 50,000 for senior citizens. |
| Bank Deducts 10% TDS | When your interest income surpasses Rs 40,000 (Rs 50,000 for senior citizens) in a year. |
| Bank Deducts 20% TDS | When you fail to provide your PAN information to the bank. Remember to furnish your PAN details to the bank. |
| TDS Deduction Is Not Applicable | When your total taxable income is below Rs. 2.5 lakhs in a year. |
Ways To Reduce or Save Tax on Fixed Deposit
- Submit Form 15G/15H: If your overall taxable income is less than Rs 2.5 lakhs in a year, you can send either Form 15G (for individuals below 60 years) or Form 15H (for senior citizens) to the bank. These forms signify that your income is below the taxable limit, which prevents the bank from deducting TDS on the interest earned on your FDs.
- Invest Across Multiple Names: Consider investing in the names of your family members, such as spouses or children. This may help you spread your interest income and keep it below the TDS limit for each individual.
- Diversify FD Investments: Rather than investing a substantial amount in a single FD, consider distributing your investment among several FDs or different banks. This approach can assist you in maintaining interest income from each FD below the TDS limit, thereby avoiding TDS deductions.
- Tax-Saver FDs: Explore investing in tax-saver FDs with a five-year lock-in period. Even though TDS is applicable, these FDs provide tax benefits under Section 80C of the Income Tax Act.
Benefits Of Investing in IndusInd Bank Fixed Deposits
Investing in IndusInd Bank FDs offers the following benefits:
- Instant online booking in three easy steps
- Video KYC facility available for online FD booking
- Best-in-class fixed deposit rates
- Multiple options for interest payment: monthly, quarterly, half-yearly, annually or at maturity
- Flexible tenures ranging from 7 days to 10 years
Secure your future with IndusInd Bank’s fixed deposits, offering steady returns and flexible terms. Start saving today!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
