Fixed Deposits (FDs) continue to be a preferred investment choice among taxpayers for their lower risk and assured returns. However, understanding the Tax Deduction at Source (TDS) implications on FD interest is crucial. This article provides insights into how taxpayers can check and verify TDS on their fixed deposits, ensuring a seamless income tax filing experience.
When the annual interest on FDs exceeds Rs 40,000 (Rs 50,000 for senior citizens), banks apply TDS at a rate of 10% under section 194A of the Income-tax Act, 1961. For non-residents, the TDS rate is a flat 30%, plus health and education cess at 4%. To manage tax liability effectively, individuals need to declare FD interest as taxable income while filing tax returns, claiming credit for TDS.
Verification Methods:
- Form 16A Issued by the Bank:
- This certificate provides details of the deductor and deductee, PAN/TAN information, interest paid, and TDS deposited with the government.
- Issued quarterly within 15 days from the due date of filing TDS returns.
- Form 26AS:
- A comprehensive statement with tax-related details, accessible through the TRACES portal and downloadable from the income tax e-filing portal.
- Verifies taxes withheld on FD interest, offering a holistic view of an individual’s tax-related information.
Understanding these verification methods is crucial for effective tax planning. Residents with income below the taxable limit can also apply for a waiver of TDS on FD interest by submitting Form 15G (15H for senior citizens) at the start of the financial year. This proactive approach ensures that individuals manage their FD investments and tax implications efficiently.
