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TDS on Fixed Deposit

TDS on Fixed Deposit

TDS on Interest on Fixed Deposit is liable to be deducted @ 10% by the Bank if the amount paid or expected to be paid during the financial year exceeds Rs. 10,000. This limit of Rs. 10,000 is per bank branch per individual.

Therefore in case you have received more than Rs. 10,000 as interest from different branches but the interest received per branch does not exceed Rs. 10,000, no TDS would be deducted. In other words, TDS is only deducted by the Branch when the interest payout by that branch is more than Rs. 10,000 in a financial year.

TDS on Interest on Fixed Deposits basically means that at the time of payment of interest, the bank will deduct 10% of the interest as TDS (Tax Deducted at Source) and deposit this amount with the govt in your account. This amount so deducted would form a part of the total tax that has been paid by you.

tax-on-fd

If your total tax liability is more than the TDS that has been deducted you would be required to pay the tax shortage. If the total tax liability is less than the TDS that has been deducted, you can apply for Refund of TDS.

As per Section 206AA, in case the interest payable by the bank is more than Rs. 10,000 and PAN No. has not been submitted by the taxpayer, TDS @ 20% would be deducted in this case. The main motive of this provision is to encourage people to submit their PAN Card No. to the bank or else the TDS would be deducted at a higher rate. In case you don’t have a Pan Card, you can make an application in Form 60 stating that you don’t have a PAN Card.

TDS on Fixed Deposit

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