Tds on 3 year fd

TDS 782 views 5 replies

Nitin

83 Points Joined December 2011

Dear Experts,

I have very simple query. As per my knowledge if interest income on FD is greater than 10,000 per annum then TDS will be deducted.
My query : with 9% interest per year and if I deposit 1 Lac for 3 year Deposit. Then at the end of 3 year i will get 9,000 x 3 = 27,000.

Please note i do no have any other income. So i am confused as per year income will be 9,000 which is lower than 10,000 (and not applicable for TDS). But i will be whole amount at the end of 3 years as 27,000 ( which is greater than 10,000 ).

So will TDS be deducted on 27,000 after 3 years on maturity or no TDS will be deducted as 9,000 per year is lower than 10,000.

Regards
Nitin

Replies (5)

Nitin

83 Points Joined December 2011

Experts any answers will be apreciated.
Please help.

Mihir

Wealth Manager

5293 Points Joined December 2008

If your FD is a 3 year lock-in, then your interest accrued shall be deemed reinvested. Additionally, banks follow compound interest and not simple interest. Bank will deduct TDS if the interest is likely to exceed Rs. 10,000/- pa.

For example Rs. 100,000 invested

1st year interest on 100,000 - Rs. 9,000/-

2nd year interest 109,000 - 9,810/-

3rd year interest on 118,810 - 10,693/-

Total interest is not Rs. 27,000 but Rs. 29,503/- which is almost Rs. 10,000/- pa

Nitin

83 Points Joined December 2011

Originally posted by : Mihir
	If your FD is a 3 year lock-in, then your interest accrued shall be deemed reinvested. Additionally, banks follow compound interest and not simple interest. Bank will deduct TDS if the interest is likely to exceed Rs. 10,000/- pa. For example Rs. 100,000 invested 1st year interest on 100,000 - Rs. 9,000/- 2nd year interest 109,000 - 9,810/- 3rd year interest on 118,810 - 10,693/- Total interest is not Rs. 27,000 but Rs. 29,503/- which is almost Rs. 10,000/- pa

Thanks Mihir for clear answer.
So as per above scenario tax will be deducted on the interest earned on 3rd year on interest 10,693 /- ( no TDS for 1st and 2nd year interest).
My main intention of question is wheter tax is deducted on overall sum of interest earned at the End of 3 years (9,000+ 9,810 + 10,693 =29,503) or on the interest per year ?

CS,CA F,Numrologi TusharSampat

CS CA F Numerologist Astrologer Graph

85935 Points Joined May 2010

in the 3 year if u have total income below slab then file form 15-G if you are non senior citizen or form 15H if your senior citizen in 3 year then no tds will be deducted by the bank.

Nitin

83 Points Joined December 2011

Originally posted by : M.com CA,CS FinTushar Sampat
	in the 3 year if u have total income below slab then file form 15-G if you are non senior citizen or form 15H if your senior citizen in 3 year then no tds will be deducted by the bank.

Thanks Tushar,
Currently i don't have any income but may be next year onward i will have salary income. In that case should i fill form 15G ?