Fixed Deposits and Tax Deducted at Source( TDS)

Investing is important- however understanding rules and keeping paperwork in order is even MORE important.

 Today I will talk about a rule on TDS on Fixed deposits.

The rule is that if the interest earned is > 10,000 Rs per annum, then TDS will be cut. and this will be at a rate of 10%.

So how do we try and avoid TDS?

1. Ensure that if your income is below the min taxable income ( housewives etc) please use the form 15G and submit it at the branch to avoid TDS impact.
2. TDS is calculated at the branch level- which means that if you have earned interest >10,000 at one branch of a any bank then TDS will be cut. So the option of creating FDs in different branch makes sense to do ( especially if you forget to claim usually the TDS amounts)
    While creating your FDs online, choose different branches when the interest amounts > 10,000!!!

here is a link which helps you calculate what is the interest earned on your FD-- Quite a nifty tool on yahoo finance!!
http://www.personalfn.com/yahoo/calc/tax/return1.asp


Another Important aspect is that please submit your PAN when creating your FD. This will avoid TDS at the rate of 30% vs the rate of 10% if PAN is submitted

So , understanding of rules is important.. Understand and then implement.-- every drop counts

Happy investing!!
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