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Tax on fds

Pooja Karadgi (Others) (9 Points)

15 September 2015

Hi,

Got to know that the interest earned on FDs if it is beyond 10,000,it is applicable for TDS.

Is the principal amount taxed as per our income tax slab rates if it is not a tax saving FD?

Also,suppose I have 100000 as savings from my previous job(which was under 0% tax slab) and now if I wish to invest it in FDs,will the principal amount be liable for tax deduction?

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2 Replies

CMA Poornima Madhava (CMA) (13097 Points)
Replied 15 September 2015

Principal amount of FD is not taxable provided the source of income for opening such FD was taxed earlier.
If such FD is not eligible for deduction u/s 80C, then no deduction can be claimed from income chargeable to tax
Interest on FD is taxable (in any case) and TDS is applicable if such interest exceeds Rs.10,000 p.a. in case of bank FDs.

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Miss Rinkal (Student) (1304 Points)
Replied 17 September 2015

Yes If interest on FD is 10000/- or more, the same I liable for TDS. However if you total income is below 250000/- then you can submit Form 15G in order to no deduction of tax at source The FD principal amt is not subjected to tax irrespective of whether it is tax saving or not However the FD that you have made should be from the funds which were taxable either to you ( if not gifted) and to the donor (if gifted) If the source of FD is not disclosed then you will be liable to pay tax on it as well In the present case, where FD is made out of income from previous job, therefore the principal amt on FD is not taxable, however interest is subjected to taxable income