Private sector lender IDFC First Bank has changed the interest rates on fixed deposits (FD). After this change, on making FD in the bank, ordinary citizens will get annual interest ranging from 3.0% to 8.0%.
At the same time, the bank is offering 0.50% more interest to senior citizens as compared to normal citizens. In such a situation, the bank will give them annual interest ranging from 3.50% to 8.50%. Changes in interest rates have been made on FDs of less than Rs 2 crore. The new rates are applicable from today i.e. March 21.
The interest received from FD is fully taxable. Whatever interest you earn on FD in a year is added to your annual income. On the basis of total income, your tax slab is determined. Interest income earned on FD is considered “Income from Other Sources”.
If your income is less than Rs 2.5 lakh in a year, the bank does not deduct TDS on fixed deposits. However, for this you will have to submit Form 15G or 15H. In such a situation, if you want to save TDS, then definitely submit Form 15G or 15H.
If your interest income from all FDs is less than Rs 40,000 in a year, then TDS is not deducted. Whereas if your interest income exceeds Rs 40,000, then 10% TDS will be deducted. In case of not providing PAN card, the bank can deduct 20% TDS.
This limit for deducting TDS on interest income more than Rs 40,000 is for people below 60 years of age. At the same time, income up to Rs 50 thousand from FD of senior citizens above 60 years of age is tax free. If the income is more than this, 10% TDS is deducted.
If the bank has deducted TDS on your FD interest income and your total income is not subject to income tax, then you can claim the deducted TDS while filing taxes. This will be credited to your account.
