TDS on FD & RD Deposits | FD vs RD

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FAQ's on TDS on FD and RD

Is TDS applicable to FD and RD?

Yes, TDS is applicable to FD and RD. TDS stands for Tax Deducted at Source. It is a system where the government collects tax from the payer of an income, such as interest, at the source of payment.

What is the TDS rate for FD and RD interest?

The TDS rate for FD and RD interest is 10%. However, if the investor is a senior citizen (60 years or above), the TDS threshold is Rs. 50,000. This means that if the total interest earned on FDs and RDs in a financial year does not exceed Rs. 50,000 for senior citizens, no TDS will be deducted.

What are the TDS charges on FD?

The TDS charges on FD are calculated as follows:

Interest earned in a financial year > Rs. 40,000 (or Rs. 50,000 for senior citizens)

TDS = 10% of the interest earned

For example, if you are a senior citizen and you earn Rs. 55,000 interest on your FDs in a financial year, TDS of Rs. 5,000 will be deducted.

What is the TDS rate on RD?

The TDS rate on RD is also 10%. However, the TDS threshold is different for different maturities.

The TDS thresholds for RD are as follows:

1 year: Rs. 30,000

2 years: Rs. 40,000

3 years: Rs. 50,000

5 years: Rs. 60,000

For example, if you are a non-senior citizen and you have an RD with a maturity of 3 years, TDS of Rs. 1000 will be deducted if the interest earned in a financial year exceeds Rs. 40,000.

Can banks deduct TDS on fixed deposits?

Banks or post offices deduct TDS or tax when the aggregate interest income on all fixed deposits exceeds or tops ₹40,000 per financial year. The limit is ₹50,000 in the state of senior citizens.

Can RD be shown for tax exemption?

Interest received on post office RD, and NSC is available for tax exemption within the total limit of ₹1.5 lakhs in the years that it is invested again.

Is RD better than FD?

The interest amount obtained at the end of maturity of a fixed deposit is more important or higher than the interest received on an RD. The interest amount received and earned is lesser than the interest earned on a fixed deposit. The interest earned on a recurring deposit is paid on maturity along with the capital amount.

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