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Can bank deduct tds on interest when it is transfered to lic

Swady (Digital World) (115 Points)

27 September 2015

Hello Experts, please help me on this scenario I am very confused :(

Suppose I invest Rs 2lakh in 8% Fixed Deposit of Bank with the option to "Repay Interest and carry on Principal amount for next year". So under this scheme I will get Rs 16,000 as interest to my savings account and Rs 2lakh will again be reinvested for another year with that prevailing interest rate.

Now as per bank's rules Rs 16000 is more than Rs 10000 so bank will deduct the amount right? But what if I get the interest today and within that week I transfer the Rs 16000 to LIC as premium? Will the bank be able to deduct TDS also then??

Please help me!

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15 Replies

JAGANATHAN R ACMA, SAP(Fi-Co) (Manager Accounts and Finance) (915 Points)
Replied 27 September 2015

bank deducte the TDS 16000 as per the 10%

Swady (Digital World) (115 Points)
Replied 27 September 2015

@ Jaganathan But I am immediately putting it away.

manish jain (sr associate) (63 Points)
Replied 27 September 2015

Bank will deduct the TDS. It is to be noted that it is duty to bank to deduct TDS if the interest amount exceeds of INR 10000. Kindly clarify, have you recevied interest amount in your saving bank account if yes, how much.

S. Shiroor (Others) (1207 Points)
Replied 27 September 2015

Int received from Banks comes under other income any int above 10k will attract TDS @ 10% on entire amt and

Money paid for LIC premium is money investment u/s 80C

The two has no connections at all.

you have to file return and consume that TDS and claim Refund.

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 27 September 2015

Bank is not concerned when and where are you investing the interet amount. The TDS will be deducted.

harekrushna sahoo (accounts officer) (22 Points)
Replied 27 September 2015

I fully agree with karadata.

JAGANATHAN R ACMA, SAP(Fi-Co) (Manager Accounts and Finance) (915 Points)
Replied 27 September 2015

kindly reply with answer

Rajesh Kumar Gupta (Senior Divisional Manager) (714 Points)
Replied 27 September 2015

Why don't you invest in 5 year tax saving FD in Bank at 8% pa. You will get tax benefits u/s 80C upto 1.5 lacs. You buy a term plan and pay very less premium for same SA. Saved premium will yield higher return than LIC.

1 Like

Swady (Digital World) (115 Points)
Replied 27 September 2015

@ Rajesh Now I got more confused :-) but seems like your plan is cool.. can you please explain what is a term plan.. and how can I pay less premium for "SA" what is SA?

Please enlighten me Sir!

Tejvir Sharma (Credit Manager) (36 Points)
Replied 27 September 2015

Under term plan you have to pay lower amount of premium for higher sum assured (SA). Since under term plan , claim is settled in the event of mis happening only.

hitesh kumar sharma (artical assistent) (21 Points)
Replied 27 September 2015

You can submit 15G/H if total income below the total income chargable to tax ie. gross income <250000, your complete amount of interest will not subject to TDS if you submit 15 G/H before due date of credit of interest either in Ac or in commuletive to FDR Ac. this is the only way by which you can exclude yourself from TDS provision