Question 1

What is a Fixed Deposit?

Accepted Answer

A fixed deposit (FD) is a type of investment where you deposit a certain amount of money for a fixed period of time at a fixed interest rate. FDs are a popular investment option in India because they are low-risk and offer guaranteed returns.

Question 2

Will I be able to get FD interest without TDS if my income is below the taxable limit?

Accepted Answer

Yes, you can get FD interest without TDS if your income is below the taxable limit. To avoid TDS deduction on FD interest, you can submit Form 15G or Form 15H to your bank or financial institution. Form 15G is for taxpayers below the age of 60, and Form 15H is for senior citizens.

Question 3

When do banks or post offices deduct tax or TDS?

Accepted Answer

Banks and post offices deduct TDS on FD interest when the interest amount exceeds Rs. 40,000 in a financial year for individuals below the age of 60 and Rs. 50,000 in a financial year for senior citizens.

Question 4

What is the TDS rate on FDs?

Accepted Answer

The TDS rate on FD interest is 10%.
Here are some additional things to keep in mind about TDS on FDs:

If you have multiple FDs with the same bank or financial institution, the bank or financial institution will deduct TDS on the total interest earned from all of your FDs.

If you have FDs with different banks or financial institutions, each bank or financial institution will deduct TDS on the interest earned from the FD held with them.

You can claim a refund for any excess TDS deducted on your FD interest by filing your income tax returns.

Question 5

Is FD a good investment for saving on taxes?

Accepted Answer

Fixed deposits are the most widely accepted form of tax saving investment. They not only reduce the tax on your income, but also provide guaranteed returns. The tenure is also flexible and acts as an investment scheme offered by banking and non-banking financial entities.

Question 6

What is the minimum amount needed to open a tax Saver FD account?

Accepted Answer

The minimum amount of unlocking a fixed deposit is chosen by the bank or the financial organisation.

Question 7

Can a fixed deposit that saves taxes be withdrawn?

Accepted Answer

Fixed deposits that protect on taxes have a 5-year lock-in term. In this example, early withdrawal is not authorised. But after five years, it can be withdrawn at any moment, according to the terms and circumstances set forth by the bank or other financial institution.

Question 8

Is PPF a more effective tax-saver than FD?

Accepted Answer

Compared to FDs, PPF offers a higher return and a longer lock-in period. The income from PPF is completely tax free in the hands of investors from the perspective of tax savings, but the income from FD is entirely taxable. Therefore, PPF is a better option for tax savings than FD.

Question 9

How much FD is exempt from taxes?

Accepted Answer

Notably, they are exempt from paying tax if their annual total income (including FD interest) is less than ₹5,00,000.

Question 10

Can TDS on FD be refunded?

Accepted Answer

Yes, TDS on FD can be refunded if the taxpayer's total income for the financial year is less than the basic exemption limit. To claim a TDS refund, the taxpayer must file an income tax return (ITR) for the financial year in which the TDS was deducted.

Question 11

Is TDS charged on FD?

Accepted Answer

Yes, TDS is charged on FD interest income. However, there is an exemption limit for TDS deduction on FD. For resident Indians, the exemption limit for TDS deduction on FD is Rs. 40,000 for the financial year 2023-24. For senior citizens, the exemption limit for TDS deduction on FD is Rs. 50,000 for the financial year 2023-24.

Question 12

How can I avoid TDS deduction on FD?

Accepted Answer

You can avoid TDS deduction on FD by submitting Form 15G or Form 15H to the bank or financial institution where you have the FD. These forms are self-declaration forms that state that your total income for the financial year is less than the basic exemption limit.

Question 13

How much TDS is cut on FD?

Accepted Answer

The amount of TDS that is cut on FD depends on the taxpayer's PAN status and the interest income earned. For resident Indians, the TDS rate on FD interest income is 10% if the interest income exceeds Rs. 40,000 for the financial year. For senior citizens, the TDS rate on FD interest income is 10% if the interest income exceeds Rs. 50,000 for the financial year.

Question 14