Tds on fd interest? Its affect if we also earned interest on sa?

[NikhilG]

Hello,
I understand that bank deducts 10 percent tds on fd interest if its more than 40k per year. But does that mean, if I also have my sa with same bank and already accumulated more than 40 k in interest that year I'm not eligible to have that 40k waiver limit?

 

[Anindya98]

Hello,
I understand that bank deducts 10 percent tds on fd interest if its more than 40k per year. But does that mean, if I also have my sa with same bank and already accumulated more than 40 k in interest that year I'm not eligible to have that 40k waiver limit?

For FD, it is 40K
SB overall 10K a year, after that 10% on the full amount.
AFAIK, in both cases, all the FD & SB are included, not bank-specific.

 

[NikhilG]

For FD, it is 40K
SB overall 10K a year, after that 10% on the full amount.
AFAIK, in both cases, all the FD & SB are included, not bank-specific.

So someone who already earned say 1 lac in this fy on savings account interest won't be eligible for 40k waiver if he opens fd?
Did you understand my question?

 

[Anindya98]

So someone who already earned say 1 lac in this fy on savings account interest won't be eligible for 40k waiver if he opens fd?

Yes, you are eligible for the 40K FD waiver.

Did you understand my question?

Yes, both are separate, and you are eligible for both. So for X Bank you will get 10K(SB) + 40K (FD)

 

[hender]

Hello,
I understand that bank deducts 10 percent tds on fd interest if its more than 40k per year. But does that mean, if I also have my sa with same bank and already accumulated more than 40 k in interest that year I'm not eligible to have that 40k waiver limit?

So someone who already earned say 1 lac in this fy on savings account interest won't be eligible for 40k waiver if he opens fd?
Did you understand my question?

(TDS while bank pays interest to you for Saving or FD is a step 1. 🪜
Filing ITR with Salary/Business along with Interest Income is 2.)

How is Tax and TDS on FD Interest Levied?

Interest income from fixed deposits is fully taxable and should be reported under the head 'Income from Other Sources' in your Income Tax Return. Your FD interest is taxed as per the income tax slab you fall into. To check your FD tax obligations, add your interest income to the total income, check the tax slab you fall into (for example: 30%) and calculate accordingly. You can use an online Income Tax Calculator to calculate the same.

The new TDS exemption limit for Fixed Deposit is ₹50,000 for regular citizens and ₹1 lakh for senior citizens - this is applicable for FY 2025-26. The TDS applicable on FD interest is 10%, if you provide PAN card to the bank and 20% if you don't provide PAN card information to the bank.

It is important to note that the FD interest tax is deducted at the time of interest credit and not when the FD matures. For example, if you have a fixed deposit for 2 years, the bank will deduct TDS at the end of each year.

TDS or Tax Deducted at Source is a taxation mechanism through which tax is deducted from certain payments made to individuals.

For example, if you earn an FD interest of ₹60,000, the bank would deduct TDS of 10%. When filing your Income Tax Return, it is necessary to report the entire interest earned and claim the TDS deducted as a refund if any.

Taxation of Savings Account Interest
Interest earned from a savings account is categorized under "Income from Other Sources" and is taxable as per the individual's applicable income tax slab. Notably, banks do not deduct Tax Deducted at Source (TDS) on savings account interest. However, taxpayers can avail deductions under Sections 80TTA and 80TTB of the Income Tax Act.


Section 80TTA: Deduction for Interest on Savings Accounts

Section 80TTA provides a deduction of up to ₹10,000 per financial year on interest earned from savings accounts held with banks, post offices, or cooperative societies. This deduction is available to individual taxpayers and Hindu Undivided Families (HUFs) but excludes senior citizens, who are covered under Section 80TTB. If the total interest earned exceeds ₹10,000, the excess amount becomes taxable.

 

[NikhilG]

(TDS while bank pays interest to you for Saving or FD is a step 1. 🪜
Filing ITR with Salary/Business along with Interest Income is 2.)

How is Tax and TDS on FD Interest Levied?

Interest income from fixed deposits is fully taxable and should be reported under the head 'Income from Other Sources' in your Income Tax Return. Your FD interest is taxed as per the income tax slab you fall into. To check your FD tax obligations, add your interest income to the total income, check the tax slab you fall into (for example: 30%) and calculate accordingly. You can use an online Income Tax Calculator to calculate the same.

The new TDS exemption limit for Fixed Deposit is ₹50,000 for regular citizens and ₹1 lakh for senior citizens - this is applicable for FY 2025-26. The TDS applicable on FD interest is 10%, if you provide PAN card to the bank and 20% if you don't provide PAN card information to the bank.

It is important to note that the FD interest tax is deducted at the time of interest credit and not when the FD matures. For example, if you have a fixed deposit for 2 years, the bank will deduct TDS at the end of each year.

TDS or Tax Deducted at Source is a taxation mechanism through which tax is deducted from certain payments made to individuals.

For example, if you earn an FD interest of ₹60,000, the bank would deduct TDS of 10%. When filing your Income Tax Return, it is necessary to report the entire interest earned and claim the TDS deducted as a refund if any.

Taxation of Savings Account Interest
Interest earned from a savings account is categorized under "Income from Other Sources" and is taxable as per the individual's applicable income tax slab. Notably, banks do not deduct Tax Deducted at Source (TDS) on savings account interest. However, taxpayers can avail deductions under Sections 80TTA and 80TTB of the Income Tax Act.


Section 80TTA: Deduction for Interest on Savings Accounts

Section 80TTA provides a deduction of up to ₹10,000 per financial year on interest earned from savings accounts held with banks, post offices, or cooperative societies. This deduction is available to individual taxpayers and Hindu Undivided Families (HUFs) but excludes senior citizens, who are covered under Section 80TTB. If the total interest earned exceeds ₹10,000, the excess amount becomes taxable.

You completely misunderstood the question.

 

[hender]

You completely misunderstood the question.

Help me to understand..

 

[NikhilG]

Help me to understand..

We all know banks deduct no tds on sa whatever is interest, but for fd as soon interest for that fy is more than 40k they deduct 10 percent tds. So consider in the current fy bank has already paid me interest of 1 lakh on my savings account balance, could they say as bank already paid interest of 1 lakh they would start deducting tds on fd not considering 40k waiver.

 

[hender]

We all know banks deduct no tds on sa whatever is interest, but for fd as soon interest for that fy is more than 40k they deduct 10 percent tds. So consider in the current fy bank has already paid me interest of 1 lakh on my savings account balance, could they say as bank already paid interest of 1 lakh they would start deducting tds on fd not considering 40k waiver.

That's why I wrote, pls go through it, understand how the system works.
No such waiver or the way you try to understand IT.

 

[NikhilG]

That's why I wrote, pls go through it, understand how the system works.
No such waiver or the way you try to understand IT.

Pardon me by waiver i didn't mean actual waiver i just meant would the bank consider fd interest separately for tds deduction?

 

[hender]

Pardon me by waiver i didn't mean actual waiver i just meant would the bank consider fd interest separately for tds deduction?

Fair enough, Got confirmation - how you like to get clarity - Shoot your Query- I'll try to answer, whatever possible.

Coming to your query -
Y E S

 

[Trust Me]

It is important to note that the FD interest tax is deducted at the time of interest credit and not when the FD matures. For example, if you have a fixed deposit for 2 years, the bank will deduct TDS at the end of each year.

For cumulative FDs, banks typically credit interest (after TDS) Quarterly, -- not at the end of the year.
.

 

[hender]

For cumulative FDs, banks typically credit interest (after TDS) Quarterly, -- not at the end of the year.
.

It was just to give a fair idea in simple terms that (tax will not linger on), related to query, those having fd for long term, they knew many things.