TDS on Tax Saving FD and it's maturity

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    SLSSLS New Member

    My aggregate salary Rs 350000.
    After deducting my savings under section 80 c there is no tax liability.

    In a bank, I purchased a tax saving FD of 5 years. The bank cut TDS.
    While filing return online, this TDS was refunded.
    I can not fill Form 15G, as my aggregate salary is taxable. So, bank will cut TDS in subsequent years, but this TDS also will be refunded in next years while filing return.
    Now my question is that.... Will I need to show the Interest got on the maturity of this FD ? How this interest will be shown in return? will this interest be taxed again?
  2. ZED

    ZED Well-Known Member

    You should show the interest as per the interest cum TDS certificate , in each financial year. Interest will not be considered again at the time of maturity.

    Interest will be shown under income from other sources.

    SLSSLS New Member

    Thank you. Please clarify it a little more.
    Suppose I have an FD of Rs 10000 and it's maturity value is Rs 15000. Then at maturity Rs 5000 will be shown as interest income or the interest cum TDS for only 5th year
  4. ZED

    ZED Well-Known Member

    Sir, in case of an income under the head of *income from other sources* , as per S.145 , assessee has an option to either adopt mercantile basis of accounting or cash basis.
    But, there is one more provision, which says tax deducted is income received. Therefore, in cases where there is tax deduction, I advice to follow mercantile basis of accounting.

    In the current scenario, your tax is being deducted and hence my advice to you is to offer this income to tax on accrual basis. You must also be getting TDS certificate and it will have details of income accrued to you.

    You should declare that income which has been considered as accrued to you. This will happen in all 5 years. Just include this income in all 5 years and you are not liable to do anything else.

    Suppose, you are getting 1,000 each year as interest. Then for each of the five years show 1,000 as income from FD.
    Lush likes this.
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