GOOD READS

Minimising TDS on your fixed deposit

Tax deduction at source (TDS) could have a significant impact on the maturity amount of your bank fixed deposits. It assumes greater importance especially for those who are conservative in their investments and rely heavily on bank fixed deposits for generating income. In case of senior citizens, whose only source of income is the interest earned on fixed deposits, any leakage could lead to some discomfort.
So, is there a way to work around TDS and have minimum  leakage? Yes. Proactive tax management is the order of the day if your  situation demands that every penny needs to be counted. We tell you how to minimise your losses.
How TDS works. According to present income tax guidelines, banks are required to levy 10 per cent TDS on deposits if the total interest earned on your fixed deposits in a bank branch is more than Rs10,000 in a fiscal. At the end of every fiscal, i.e., 31 March, tax is deducted on the basis of interest accrued on the fixed deposit(s), even if this interest has not been credited. Every time interest is paid on your fixed deposits, banks check whether it is subject to TDS and, if it is the case, tax is deducted.
Saving TDS. One of easiest way adopted by many depositors is to spread their investments across various branches so that the interest earned in a particular branch is below Rs10,000 in a financial year. However, do remember that you will still need to account for the interest earned while filing your income tax returns for the year. So, if your income is taxable, then you will need to pay taxes according to your income bracket. If you are below 60 years and your tax liability after all deductions and exemption is expected to be nil, then you can avoid TDS by submitting Form 15G. Brijesh Dalmia, a Kolkata-based financial planner, says: “If your interest income is expected to be Rs10,000, by presenting the Form 15G what you are saying is that your income will not be taxable on this income even if you include it to your total income.” You need to fill this form while booking your fixed deposit and at the beginning of each financial year, thereafter, till the maturity of your fixed deposit.
Gifting or booking a fixed deposit. Investors often book fixed deposits in the name of non-earning family members such as spouse and minor children. However, Salil Datar, head, branch banking & NRI business, Dhanlaxmi Bank, says: “Tax liability is calculated on the first applicant's name. In case of a minor, the interest income will be clubbed under the income of the guardian and, accordingly, tax liability will be assessed.” Therefore, in case the deposit is in the name of a minor, the bank would still levy TDS. In case the deposit is in the name of a non-earning family member, he or she will have to submit From 15G. Veer Sardesai, a Pune-based financial planner, says: “If the money is gifted to a non-earning member and the deposit is booked in his or her name, then the person has to submit a declaration saying his or her income is not taxable. However, when income tax is calculated, it will have to paid by the donor or earning member.”
Senior citizens. For senior citizens aged between 60 years and 80 years and whose only source of income is from fixed deposits totalling less than Rs2.5 lakh, after all the deductions and exemptions, they can avoid TDS by submitting Form 15H. Senior citizens above 80 years enjoy tax exemption on taxable income of up to Rs5 lakh in a financial year. Therefore, for those of you who are 80 years or older, you may submit Form 15H if your taxable income is below Rs5 lakh.
When FDs across branches makes sense. For senior citizens whose tax liability is nil and who want to avoid visiting the bank to submit Form 15H, it might be better to  spread their investments in different branches or banks to avoid TDS. Often investors complain that even after filing Form 15G or Form 15H banks are found wanting when it comes to  processing the forms. In most cases, an investor realises that something has gone amiss only when they learn that TDS has already been deducted. Sardesai says: “In some cases, we have found that the bank has deducted TDS in spite of submitting Form 15G/H, because the bank had not processed the same. That's why honest taxpayers often prefer to put deposits in different branches.” In such cases, you can file your income tax return once a year.
How to get TDS refund. If your tax liability is nil, but the bank has levied TDS on the interest earned on your fixed deposit then you can claim refund by filing your income tax return. Datar says: “Customers can take their TDS certificates (Form 16A) from banks and also check the amount deposited to the Income Tax Depart-ment based on their PAN number on the Income Tax website under certificate AS26. Based on the same, customers can apply to get the refund from the IT department.”

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
1
2
3
4
5
6
7
8
9
10

Latest News

  • GM to battle VW in China with $12 bln investment and new plants

    U.S. car giant General Motors Corp (GM) (GM.N) plans to invest $12 billion in China from 2014 to 2017 and build more plants next year as it competes with aggressive rivals in the world's largest auto market. GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG (VOWG_p.DE), and domestic players like SAIC Motor Corp vie for more market share. In total we are investing $12 billion between …

  • Mercedes, BMW chase ultra rich clients with new high end cars

    Premium auto maker BMW (BMWG.DE) unveiled a luxury concept sedan in Beijing on Sunday, to gauge customer appetite for a car that would cost more than German manufacturer's current flagship 7 series limousine. Ian Robertson, BMW Group's board member responsible for sales and marketing said the car is being presented the Auto China show in Beijing as a way to test customer opinion in the world's largest car market. Around half of tall the 7-series flagship models made by BMW end up being sold …

  • Reliance rubber unit sets up customer support in Vadodara

    Mumbai, April 20 (IANS) Relflex Elastomers, the synthetic rubber business unit of Mukesh Ambani-led Reliance Industries Ltd (RIL), Sunday inaugurated a customer support centre at its petrochemicals complex ... …

  • GM to invest $12 bln in China and plans more plants

    U.S. car giant General Motors Corp (GM) (GM.N) plans to invest $12 billion in China from 2014 to 2017 and build more plants next year as it steps up its presence to compete with aggressive rivals in the world's largest auto market. GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG (VOWG_p.DE), and domestic players like SAIC Motor Corp vie for more market share. In total we are …

  • In the driving seat: China's yuppies are new market force for global a …

    SHANGHAI/BEIJING (Reuters) - Global automakers are scrambling to meet the demands of China's young urban professionals, who want a car that makes them stand out, yet don't always have the money to splurge on a top-end model. After nearly two decades of frenzied growth driven mainly by the very wealthy, China's auto market is maturing, yet remains ferociously competitive with manufacturers having to react quickly to shifting consumer trends. People like Zhou Wenxi, a 32-year-old Shanghai …

IN-DEPTH ANALYSIS & INTERVIEWS

  • This might well be India’s biggest Ponzi scam

    It was just too good to be true. Ashok Khital, 45, displays every symptom of a man who knows he's been conned. …

  • India's star studded football league

    High and mighty including Sachin, Salman & Sun Group buy ISL teams …

  • Leaderspeak with Rajesh Janey

    Rajesh Janey, President - India & SAARC, EMC shares many firsts in his life. …

  • Seed of Doubt

    Field trials have been allowed again in India. But two decades after their global launch, genetically modified (GM) crops remain controversial. …

  • Power Hungry

    Gujarat has power round-the-clock. Most other states do not. Why this will matter in the general elections. …

  • Etcetera

    The most keenly watched contest of the current general election will be the one for the Varanasi parliamentary seat, where the Bharatiya Janata Party's prime ministerial hopeful Narendra Modi squares off ... …

  • Economy vs Democracy

    As the country gets election fever, cash comes out of mattresses and turns into liquor, gifts, and food. But it is not bad for the health of the economy, reports Sarika Malhotra from the trenches. …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    16.52+0.88+5.63%
    UNITECH.BO
    73.85+3.05+4.31%
    HDIL.BO
    13.36+0.25+1.91%
    SUZLON.BO
    718.55-6.70-0.92%
    HDFCBANKSL.BO
    57.40+2.75+5.03%
    JAIPRA.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    12.60+2.10+20.00%
    AGRIMONY.BO
    242.50+40.40+19.99%
    ACRYSIL.BO
    83.50+13.90+19.97%
    SICAL.BO
    46.00+7.65+19.95%
    SHRGLTR.BO
    65.25+10.85+19.94%
    AHLUCONT.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    11.60-2.70-18.88%
    ANISHAIMPEX.BO
    51.10-8.85-14.76%
    WINSOMTX.BO
    11.70-1.30-10.00%
    BLCISER.BO
    425.00-40.00-8.60%
    GCMSECU.BO
    59.40-5.55-8.55%
    JBML.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.