Why do Banks deduct TDS on FD Interest?

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  1. shivaji patil

    shivaji patil New Member

    Why bank deduct TDS on FD interest?
  2. nafeesa

    nafeesa Member

    You may escape from income tax as you are a small assesse.
    so income tax department has introduced this concept of TDS.
  3. ileana

    ileana New Member

    A normal fixed deposit is not eligible for tax deduction and neither is the interest on it. In fact the interest earned in a tax saving fixed deposit is also taxable since it is considered a source of income. The tax deducted will however be on the interest that exceeds Rs 10,000 in a year. If you have provided your PAN number then the tax will be about 10% but if you have not, then it will be about 20%. If you are not liable to pay taxes then you can furnish forms 15G & 15H to the bank and the TDS will not be deducted.
    For more information you can check here: TDS on FD
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