In India, fixed deposit is considered the safest and most stable avenues for individuals seeking low risks on their investments. With higher rates of interest than most other similar schemes with guaranteed returns, investors can earn more from FDs.

As an investor, you must know the taxation rules and regulations on their fixed deposit. When you open an FD account, the interest you earn is calculated as a part total income but as ‘income from other sources’ and not as your salaried income. The financial institution will deduct fixed deposit TDS accordingly but only if your income from salary falls under the taxable slab of Rs. 2.5 Lakh per annum.

TDS can range anywhere between 0% and 30%.

How to Avoid Fixed Deposit TDS Deduction?

One of the ways to claim tax benefits on your fixed deposit is by submitting Form 15G and Form 15H to your financial institution. These are self-declarations stating that you will pay the tax on your behalf as income tax on your total income and not on the income from your interest generated from that FD. Thus, you ensure maximum returns on your investment.

Further info on these forms:

  • Form 15G is for investors below the age of 60, trusts and Hindu Undivided Families (HUFs).
  • Form 15H is only for senior citizens, i.e. individuals above the age of 60 and those who will turn the same on the year of submitting this form.

Regardless of whichever form you submit, you must be a residing citizen of India and have a PAN card.

When to submit these forms?

The validity of Form 15G and 15H is only 1 year. Financial institutions usually deduct the tax at the end of each financial quarter. So, you need to submit these at the start of every fiscal year, before the financier deducts tax. If fixed deposit TDS is deducted due to failure of submitting the respective forms on time, you can claim a refund only after filing your income tax returns.

It’s easy to submit these forms online instead of going through a complicated manual process.

  • Simply, fill up the form with all the correct information as required.
  • Attach a copy of your PAN Card along with the form.
  • Submit these papers to the respective financial organisation.

More ways to save tax on FDs

You can plan your FD investments in a way so that interest gained in a financial year remains within the taxable slab.

You can opt for a tax saving FD which comes with a lock-in period of 5 years and gain interests completely exempted from tax.

Approach the best financial organisation in India to get the maximum assured returns from your investment. You can opt for Bajaj Finance Fixed Deposits which come with attractive features and benefits along with high-interest rates of up to 8.75% and 0.35% higher on the same for senior citizens.

Their schemes also hold ratings from CRISIL and ICRA for maximum safety and stability.
You can use an online FD interest calculator to compute your interest pay-outs and maturity amount based on investment and tenor. This can help you plan your investments accordingly and submit the forms to avoid fixed deposit TDS deduction in time.