What is TDS?
Tax Deducted at Source (TDS) is a procedure implemented by the Indian government to collect taxes at the source of income. A certain percentage of tax is deducted by the payer at the time of making payments to the receiver, and this amount is then remitted to the government.
Now, let’s talk about the Fixed Deposit TDS limit.
When you earn interest on your bank fixed deposit, the bank is required to deduct a portion of that interest as TDS. But here’s a catch - TDS is deducted only when the interest income exceeds a certain threshold limit. For individual taxpayers, this limit is ₹40,000 in a financial year. For senior citizens, it's ₹50,000.
When to submit Form 15G & Form 15H?
If your total income is below the taxable limit, you can submit Form 15G (for individuals) or Form 15H (for senior citizens) to the bank. This will prevent TDS deduction, and you can receive your full interest income.
Don't forget, it's essential to provide your PAN (Permanent Account Number) to the bank. If you don't, the TDS rate could be much higher - a whopping 20% instead of the usual 10%.
Now, let's say TDS has been deducted, but your total income falls below the taxable limit. You can claim a refund when you file your income tax return.
#tds #incometax #fixeddeposits #fd
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