Tds on rd interest accrued in banks

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Rajeesh

Administrative Officer

21 Points Posted on 03 July 2016

For financial year 2015-16 my bank has deducted 10 percent TDS on the interest accrued on my Recurring deposit for that year even though maturity date of that RD is in financial year 2018-19.(I had opted for pay back of principle and its interest on maturity date at the time of opening the RD account). So the accrued interest was not credited to my account that year and will be credited only on maturity date. Please let me know whether the deduction of TDS was as per existing income tax laws.

Replies (4)

CA FARHAT MIYAN

52 Points Posted on 03 July 2016

Dear Rajeesh,

The depositor has the option to either reinvest the interest earned on recurring deposit or to withdraw the interest earned on recurring deposit.

As you mentioned in your query You have taken the option to reinvest the interest amount.

However TDS would be deducted in both of the cases. TDS would be deducted @ 10% of the interest earned.

Hence TDS deduction is as per existing tax law.

Shubham Gupta

Business Consultants

1660 Points Posted on 04 July 2016

hello,

although you opted for interest payment at maturity but bank becomes liable to pay and in order to record in thier books(Bank) TDS also need to be deducted at the same time

CA MANISH BINDAL

CHARTERED ACCOUNTANT

353 Points Posted on 04 July 2016

Agree with above experts. Here you can apply for refund of TDS if your income does not exceed the basic exemtion limit. Get e-file your income tax return and claim such amount of TDS and it will be refunded to you.