How to save income tax/TDS on FD interest on top slab

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  1. Nirav Rane

    Nirav Rane New Member

    I left my job in the middle of the fiscal-FY'14 in the month of Aug'13 to start a new venture. My ex-employer had deducted all the taxes as per the due/highest slab.Additionally, i have around 65 lacs as FD in 2 banks in my name.Now, i guess this interest income will get added in my earlier salaried income for this fiscal and i will have to pay addl. taxes @30.9% on this interest income. Can i save this tax as i am not earning anything now after last job and logically with zero income, there shud not be any tax liability on my FD interest income also from the month of leaving job. I read about form 15G and also that one shud cancel the FD and start a new FD in spouse's name who is a housewife with nil income and can save this tax on FD interest.
    Pls. advise.Thanks
  2. Neha Sharma

    Neha Sharma Active Member

    Dear @Nirav Rane

    Yes, you can gift some amount to your wife and then make FD's on her name. As she does not have any income, she can also submit Form 15G and avoid TDS.
  3. Nirav Rane

    Nirav Rane New Member

    Thanks, Neha for your reply.
    1. Can i do the same within Mar'14 so as to save the huge TDS for current fiscal which will get levied for the int income till Mar'14.
    2. Do, i also get this Form 15G benefit as i have no income from Aug'13 month of this fiscal and can i submit my 15G also to the bank to avail benefit for this fiscal.
    3. Also, can i divide the amts. to be within 22 lacs each @9 % FD interest(to be within exemption limit of 2 lacs for each) and open 3 different FD's in same or different banks in mine or wife's or joint name.
    4. Last one :) Is the exemption limit 2 lacs/person or is it 2+ 1 lacs i.e. 3 lacs provided we give 1 lac proofs like 80c for that. In this way, we will be able to do 2 FD's only 33 lacs in joint or either's name.
    Other experts opinion welcome.

    VAIBHAV DILIP RANE Active Member

    Please note...
    Form 15G is a Declaration given by the Assessee, stating that his Total Income is below Taxable Limit, and hence TDS not to be Deducted for respective Assessment Year. Filing Form 15G even if Total Income is above Taxable Limit is a Civil Offence.

    * Your FD itself is of Rs. 65,00,000 /- means approx. Interest will come to 5,52,000 (by taking min 8.5%), in such case you should NOT file Form 15 G. Because your Interest Income itself exceeds Taxable Limit. Even is you divide it, it is crossing the limit.

    * Divison of FD, in different FDs or Banks, not matters, as Income will be consider all together.

    * Also, if by chance you come under Scrutiny,... then Assessing Officer, can club your Spouse Income with yours.

    * It is Highly Advisable to you, to concern a CA, and not take decision on your own.!!!
  5. Nirav Rane

    Nirav Rane New Member

    Thanks Vaibhav for your revert.
    The idea is to first save this fiscal's TDS on the FD interest income. Since, i don't have a salary income since middle of this year am i not entitled to TDS exemption benefit as this FD is due to my old savings and not from any new income.
    Also, advise, if i shall cancel FD's for approx. 22 lacs(at 9 % interest and 2 lacs exemption limit calc.) and put in my wife's name at least to save the TDS for the current qtr. on that amt. Is that ok as she is not working and will be entitled for 15G at least.
    Need help to save this unnecessary TDS burden this fiscal as i had already paid TDS on my old salary thru employer at the time of leaving job and was not anticipating this addl. tax.
    Pls. suggest.
    Thanks a ton .

    VAIBHAV DILIP RANE Active Member

    Yes, you can "Gift" your wife Rs. 22 Lac FD, so approx her Interest Income will come to Rs. 198,000. Which is below Taxable Limit.
    In such case your wife can file Form 15G, to avoid TDS.
    However such FD must be in your Wife name, and must be Gifted.

    If in this year, you will break FD, say in middle of March 14, then till the date of breaking FD, any Interest earned is your own Income.

    If you feel that more than what is needed as TDS is being deducted from Salary,... than by filing proper Return for this Assessment Year, if you are eligible, than you can Claim back Refund.

    * And please do be clear with "Year",... it confuse us,...
    In Income Tax one Financial Year begins from 01-April till 31-March. And Assessment Year is Subsequent year to that Financial Year.
    So Instead of saying 2014,... say 2013-14 ,... !!
  7. Nirav Rane

    Nirav Rane New Member

    Thanks a lot , Vaibhav....this clarifies.
    Can't we have a joint FD with wife as first name and my assumption was that since FD interest will be paid at the end of FY2013-14, if i cancel the FD before that, the interest will not reflect in my name but will go to my wife's name?
    Thanks n Regards

    VAIBHAV DILIP RANE Active Member

    Cancelling FDs before Maturity date is known as Pre Mature FD...
    On the eve / day you cancel or pre mature your FD,
    Bank will Calculate Interest upto the date, and will credit the same in your Name...!!! so you can't hide from Interest Income...
    And fresh Interest calculation shall be done, after re-making of FD,...

    Please don't do Tax Evasion by any mean,...

    And you are requested to appoint a CA to manage yours Portfolio, to manage your Income, to reduce Tax Burden,.. and for your Relaxation...!!!

    CAs normally charge 1000-4000 for a Individual Return,... nothing great Deal,... But will reduce your Tension for future... :)
  9. manik vohra

    manik vohra New Member

    dear mr.nirav,
    gifting the money to your wife and making a FD in her name will still not solve your problem rather it would increase it because of clubbing of income provisions under the income tax act, it would club all the interest income earned by your wife (from gifted money) in your assessable income on which you have to pay tax at much higher rate of 30.9%
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