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How To Evade Tds On Fixed Deposit Schemes?

By Author: Aishwarya Mahurkar
Total Articles: 291

Fixed deposits are one of the preferred forms of investments in India. It is a type of financial investment in which a fixed amount of money is invested for a fixed tenure at an agreed interest rate. First we must know about the kinds of fixed deposit schemes available:


• Regular Fixed Deposit: The tenure for this scheme ranges from a day to ten years. The interest rates for each period are pre-determined so the investor can choose which suits his requirements best.


• Tax saving schemes: This type of FD scheme is for investors who wish to invest for saving income tax. There is a compulsory lock-in of five years on the amount invested. During this period, the investor under no circumstance can withdraw from it.


• Company fixed deposit schemes: Under this scheme the investor can choose non-banking organizations. Choose a reputed and a credible organization and enjoy a higher interest too.


The amount invested is exempt. But the interest earned from fixed deposits is taxable under the 80C of the Income Tax Act. If the interest exceeds ten thousand in a financial year, it would be eligible for tax deduction at source (TDS) at 10 per cent. You will need to pay 0.3 per cent education CESS on interest. Therefore, a total 10.3 percent of the interest will be deducted. But, there are several ways one can save TDS on an FD:


• By submitting form 15G/ 15H, an investor states that he has no taxable income. In such a case, the bank would not deduct and TDS on the interest earned.


• Another way to avoid TDS is to split the FDs into different banks. So the interest earned does not exceed ten thousand rupees a year.


• One can also save TDS by timing the FD in such a way that the interest does not exceed ten thousand rupees. For example, one can start a 12 month FD in September. Since the financial year closes on March 31st, the interest is split between two years.


• An investor can also start one FD under their personal bank account and another under an HUF account. Hence, they are treated as separate accounts and will not have TDS charged if the interest exceeds ten thousand.


So, if you have a fixed deposit account, you can avail the best return on the investment. However, you need to know and plan it in advance accordingly. That is the vital part of evading the TDS on your account successfully.

Author Bio :

An experienced writer on finance topics, the author articulates of investment choices such as fixed deposit products in India & recurring deposit schemes. She writes about a variety of topics including the benefits of recurring & fixed deposits and how to make the right investment choice.

Total Views: 109Word Count: 458See All articles From Author

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