hurry to invest in Bank FD, TDS can shatter your profits. Do not be in a hurry to invest in FD, TDS can shatter your profits


Fixed Deposits - India TV Paisa
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Where the Reserve Bank has started increasing the repo rate from May last year. At the same time, the days of fixed deposits, which are considered to be the slowest investment option, have started turning around. In the last 10 months, all the government and private banks of the country have increased the interest rates of fixed deposits (Bank FD) more than a dozen times. Only yesterday, the Reserve Bank has once again increased the interest rates. In such a situation, there is every possibility that by next week all the banks will increase the interest rates of FD once again.

Due to this kindness of banks, young customers are also preferring to invest in FDs after stock market or mutual funds. FD is considered to be the safest and least risky mode of investment. Thinking this, people are getting FDs done in large numbers at this time. But here most of the people forget to calculate TDS i.e. Tax Deduction at Source on FD and they do not get as much profit as it appears on paper. Apart from this, you also have to pay tax on the income from fixed deposits. This is added to your total income and tax is applicable as per your tax slab.

Know the math of tax on FD

According to income tax rules, if the interest on your FD exceeds Rs 40,000, banks deduct TDS on the interest earned on it. If you are a senior citizen then you get a rebate of 10000, ie TDS is deducted after Rs 50,000. Here, the point to note is that TDS is deducted when interest is added or credited on your FD and not when the FD matures. Thus every year you have to pay tax on the interest.

20% tax if PAN is not there?

In normal circumstances, if more money is received in the form of interest than the exemption limit, then banks deduct TDS at the rate of 10 percent on your interest. But it has to be kept in mind that if you do not have a PAN number, then this TDS amount doubles, that is, you will have to pay 20% tax.

What if the income is less than the limit limit?

If the amount of interest received is within the exemption limit and the bank still deducted TDS, then you can claim it while filing income tax return. At the same time, if there is a tax liability on adding interest income to your total income, then it is necessary to pay it on or before March 31 of the financial year. This way you can pay any outstanding tax.

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