Are My Fixed Deposits Taxable?


Save your money and watch it grow through a fixed deposit account. As one of the most reliable and profitable financial instruments in the market, time deposits have met the financial needs of many people. As a potential investor in fixed deposits, it is recommended to understand how the government levies taxes on these proceeds. Thereby people can also opt for a tax saving fd which can turn out to be a good option. 

The following are some of the FD tax issues resolved:

Is my fixed deposit return subject to tax?

Your fixed income return is taxable. But your fixed deposit income may involve a lot of tax liabilities, so it is wise to have enough information and avoid any tax troubles in the future. Let some experts look at all the important facts you should know as a deposit investor.

How is my fixed deposit returns taxed?

Fixed deposits are a great way to maintain savings and increase wealth. However, interest on your fixed deposit will increase your income. Therefore, as with fixed-term income, the total return earned through a fixed-term deposit account may be taxed under the income tax law. In fact, according to the income tax law, the return on time deposits is “income from other sources” and therefore needs to be taxed accordingly.

The following are the key points regarding the taxation process for time deposits:

  • When the tax season arrives, remember that the income you earn through fixed deposits is actually combined with your income for the year. The resulting amount will then determine which tax you belong to. For example, if your annual income exceeds 1 million rupees, you will be taxed according to the income standard of “10,001,001 rupees and above” (i.e., 30%). This means that you will also be taxed 30% (plus surcharges) on the interest earned on fixed deposits.
  • There are some tax exemptions. If the interest generated by the fixed deposit does not exceed 10,000 rupees, you do not need to pay tax. In addition, as with all taxable income, if your annual income is less than Rs 250,000, the applicable tax rate for slabs is zero. Therefore, your income from fixed deposits will not be taxed.

What is TDS?

The bank where you have a fixed deposit account will automatically collect tax at source (TDS) from your fixed deposit (FD). Compare this to the above process, which is a self-declaration of applicable taxes on the fixed deposit return. Therefore, the entire tax on FD returns is paid partly through your income tax return and partly through TDS. 

The TDS applicable to the fixed deposit income statement follows certain specific rules:

  • TDS will be deducted by the bank only if your fixed deposit return surpasses 40,000 rupees within a year.
  • If the amount surpasses 40,000 rupees and you provide a PAN to the bank, the bank deducts 10% of the TDS from your fixed deposit income.
  • If you do not provide a PAN to the bank, the bank deducts 20% of the TDS from your fixed deposit income.
  • If your annual income for the year is less than Rs 250,000, you can be exempt from any TDS for fixed deposit income. In this case, one way to ensure that TDS is not deducted from the bank is to use your FD account to submit Form 15G and Form 15H to the bank.

How can the 15G and 15H forms help?

According to Article 194A of the Income Tax Law, people earn more than Rs. There is no income tax on fixed deposits of 10,000 euros, but it is also taxable. The 15G/15H form is suitable for such individuals, and they can provide zero or lower TDS deductions. See how Form 15G and Form 15H can help you:

Form 15G

– Individuals under the age of 60 can submit a 15G form to their financial institution.

Form 15H

-The form should be submitted by senior citizens, but it is important to ensure that the final tax on the estimated total income in the current fiscal year is zero.

However, it is important that both forms must be submitted at the beginning of the year because once deducted by the financial institution, the interest cannot be refunded.

Fixed deposit accounts are usually the difference between saving idle, fruitless money and receiving monetary rewards. Therefore, if you are looking for the most flexible and profitable fixed deposit account on the market, you can use ICICI Bank’s fixed deposit calculator to determine the principal, maturity and interest rate that best suits you. Choose from a tenure of 7 days to 10 years, and observe that your capital grows under the premise of a guaranteed rate of return without any market risk.