You cannot completely avoid TDS on tax-saving fixed deposits, but there are a few ways to minimise the tax outgo under various provisions of the Income Tax Act. These include:
- Tax-saving with Form 15G
Form 15G is a declaration form that individuals can submit to avoid Tax Deducted at Source (TDS) on interest earned from Fixed Deposits (FDs). By submitting this form, individuals declare that their total income is
below the taxable limit, thereby preventing TDS on their FD interest.
- Tax-saving with Form 15H
Form 15H is specifically designed for senior citizens (aged 60 years or more). It allows them to claim an exemption from TDS on the interest earned from Fixed Deposits. By submitting Form 15H, senior citizens declare
that their income is below the taxable limit, ensuring that no TDS is deducted from their FD interest earnings.
If your interest income (paid or credited) on fixed deposits by all branches of the bank exceeds the maximum amount which is not chargeable to income-tax as provided u/s 197A(1B), TDS will be deducted even if
you have submitted Form 15G / 15H.
- Tax deductions for re-investment FDs
- Tax Deducted at Source (TDS) comes into effect when the projected aggregate interest earned across all branches on Recurring Deposits (RD) and Fixed Deposits (FD) for an individual exceeds the prescribed
limit during the financial year.
- A TDS Certificate outlining the details of the tax deducted will be dispatched to the depositor each quarter, offering transparency on the TDS applied throughout the fiscal year.
- Documents required for tax-saving FD
Opening a tax-saving Fixed Deposit requires furnishing valid identification and address verification. Accepted documents include Aadhaar, PAN, Voter ID, Driving Licence, Passport or any OVD document for identity verification.
