While making an investment in FDs, I wanted to be sure of how much interest on fixed deposit is taxable. Through my enquiry to different banks, I learned that interest on FDs is completely taxable because it is considered "income from other sources" under the Income Tax Act of 1961.
How Much Interest is Taxable on FD?
As I already said, interest on FD is fully taxable. Our gross yearly income is increased by the FD interest profits, and our projected tax burden is calculated in accordance with current tax regulations. Let me explain more about it to you.
When Do We Have to Pay FD Tax?
Starting in April 2019, PAN users like us are required to pay 10% tax and non-PAN users will pay 20% tax on interest generated if the interest on FD is more than ₹40,000.
When the annual interest is credited, this interest would be subtracted as TDS (tax deducted at source).
The ₹40,000 maximum limit is only applicable to individual FDs and does not apply to aggregate earnings.
What is the TDS on FDs?
When the annual interest is credited, the tax on FD interest is subtracted as TDS.
TDS will be automatically applied by the bank on the interest you earn on your fixed deposit during a specific year.
An annual interest tax is imposed in order to spread the cost of paying taxes.
Instead of deducting TDS at the time interest is received, the issuer does it when interest is earned.
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How much Interest on Fixed Deposit is Taxable?
Vansh
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March 6, 2024
2024-03-06T12:01:29+00:00 2024-03-11T01:12:23+00:00Comment
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