Interest amount

Regarding your father's options, here are some points to consider: *Option 1: Fixed Deposit (FD) in a bank* - Advantages: - Safety and security of the principal amount - Fixed interest rate - Interest is taxable, but the bank will deduct TDS (Tax Deducted at Source) and issue a TDS certificate - Disadvantages: - Lower interest rates compared to other investment options - Interest is taxable, which may increase tax liability *Option 2: Giving the amount to a friend for interest* - Advantages: - Potentially higher interest rates compared to bank FDs - Friend may not deduct TDS, which could reduce tax liability - Disadvantages: - Risk of default or non-payment by the friend - Interest earned is still taxable, and your father may need to declare it in his IT returns - No protection or guarantee for the principal amount - May damage the friendship if there are disputes or non-payment Regarding tax deductions: - If your father chooses Option 2, he may need to declare the interest earned in his IT returns and pay tax on it. - If the friend deducts TDS, your father will receive a TDS certificate, which can be used to claim credit for the tax deducted. - If the friend doesn't deduct TDS, your father may need to pay advance tax or request his friend to provide a declaration that no TDS was deducted.

Is deduction of TDS not compulsory?