One of India's Favorite Investment Choices
The majority of indians view fixed deposits (FDs) as a dependable and secure choice when it comes to depositing their money.
Although bank savings accounts (FDs) provide a fair return on investment, the interest earned on FDs is taxable. The government has finally implemented a significant relief measure, nevertheless, exempting FD income up to ₹50 lakh from taxes. Let's examine this development in further depth.
Fixed deposits up to ₹50 lakh are tax-free.
A lot of people put their money into fixed deposits in the hopes of receiving steady returns. They frequently worry about paying taxes on the interest they earn, though. For these investors, there is now excellent news.
An Example for Better Understanding
Suppose you invest ₹50 lakh in a fixed deposit scheme that offers an annual interest rate of 7.75%. In this case, you would earn ₹3,87,500 as interest in a year. Since this amount is below ₹4 lakh, you will not be liable to pay any tax on this income.
How to Avoid TDS Deductions?
A common concern for FD investors is the deduction of Tax Deducted at Source (TDS) by banks. Whenever a bank credits interest, it may deduct TDS as per government regulations. However, if your total income comes only from FD interest and remains below ₹4 lakh, you can submit a declaration form to the bank to prevent TDS deductions.
Steps to Avoid TDS on FD Interest
If you are a senior citizen (above 60 years), submit Form 15H to the bank.
If you are below 60 years old, submit Form 15G to the bank.
These forms should be submitted at the beginning of each financial year (before april 1) to ensure the bank does not deduct TDS on your interest income.
The majority of indians view fixed deposits (FDs) as a dependable and secure choice when it comes to depositing their money.
Although bank savings accounts (FDs) provide a fair return on investment, the interest earned on FDs is taxable. The government has finally implemented a significant relief measure, nevertheless, exempting FD income up to ₹50 lakh from taxes. Let's examine this development in further depth.
Fixed deposits up to ₹50 lakh are tax-free.
A lot of people put their money into fixed deposits in the hopes of receiving steady returns. They frequently worry about paying taxes on the interest they earn, though. For these investors, there is now excellent news.
An Example for Better Understanding
Suppose you invest ₹50 lakh in a fixed deposit scheme that offers an annual interest rate of 7.75%. In this case, you would earn ₹3,87,500 as interest in a year. Since this amount is below ₹4 lakh, you will not be liable to pay any tax on this income.
How to Avoid TDS Deductions?
A common concern for FD investors is the deduction of Tax Deducted at Source (TDS) by banks. Whenever a bank credits interest, it may deduct TDS as per government regulations. However, if your total income comes only from FD interest and remains below ₹4 lakh, you can submit a declaration form to the bank to prevent TDS deductions.
Steps to Avoid TDS on FD Interest
If you are a senior citizen (above 60 years), submit Form 15H to the bank.
If you are below 60 years old, submit Form 15G to the bank.
These forms should be submitted at the beginning of each financial year (before april 1) to ensure the bank does not deduct TDS on your interest income.
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