TDS on Recurring Deposits (RDs) will be levied from FY 2015/16 – Budget 2015

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• Dear Srikant,
  1. Will TDS for RD in post office be applicable even to people who have invested before this 'TDS on RD' rule came into existence?

  2. Do they tax us on the maturity amount as well?

• Hi Shreekanth,

  Can you explain the RD account interest rate given by HDFC bank.
  Let am investing intial amount 1000.00 for a term of 12 months with an interest rate 8.2% pa,
  How the maturity value given by bank is 12543.00. even if bank deduct TDS on interest as earn 10%.

  Thanks
  Prasad

  • Dear Debaprasad..what is the frequency of compounding?

• Mr.Sreekanth Reddy,

  i have an doubt if we keep Rs.10 Lakhs in the Saving bank account for one year , or more then Rs.5 lacs ,do we need to file tax returns befor 31.08.2015. if you can help me with this information,i shall be helpfull.thank you,

  • Dear Syed,
    It depends on the source of the income (Rs 10 Lakh). It is better you file your taxes if you invest Rs 5 / Rs 10 Lakh in FD.

• Dear sir,
  My gross income is 3.2lacs. Although,due to Nsc & Pf deduction am not in income tax slab. But I do have 6 fd's with different banks. of 49k. 2 with PNB, 2 WITH SBI, 2 WITH UCO Bank.
  I have not given my PAN in UCO. As amount was below 50000. Now, According to new rule which Problem I can face & Do I haveto file return. Kindly guide.

  • Dear Pankaj,
    Yes you have to file your ITR. Kindly show all the incomes (gross income, interest income on FDs, interest income from Savings a/cs etc.,) and then pay taxes (if any) accordingly.

• Hi,

  I have RD which will mature in Aug 2015. Till now no TDS was deducted. What would be TDS deduction - on interest for the current year or on whole amount?

  Thanks

  • Dear Kshitij,
    TDS is applicable on the interest income.

• I have a rd of 1000 in bob of 10 years so I want to know weather is there any tds or I will get full maturity amount of 194000 after 10 years

  • Dear Nitesh,
    Whether TDS is deducted or not, the interest amount is taxable (if your income is above basic exemption limit).
    Kindly read my artilce - "FD & RD - Tax implications".

• Hi Sir,
  if i have saving account and fd same in the bank. and i have earned 12000 interest through saving account and 15000 earned through fd in a year then 10%tds apply fd and saving account both or single????

  Thanks,
  Nitesh

  • Dear Nitesh,
    TDS is applicable only in the case of RD / FD and not on the savings bank a/c interest amount.

• Hi Sir,

  Is TDS applicable for Savings account ? for ex if i am earning 15000 interest in a year then are the banks gonna apply 10% TDS on 5000 and deduct 500 from my total 15000 ???

  Thanks,
  Vignesh

  • Dear Vignesh,
    TDS is not applicable in case of Savings Bank Account.
    Under Section 80TTA, interest income of up to Rs 10,000 from Savings A/c can be claimed as tax deduction.
    However, any interest amount earned over and above Rs 10,000, you need to pay taxes as per your income tax slab/rate.
    Do note that Rs 10,000 is the total deduction allowed by combining all the saving bank accounts interest.

• Hi Shreekanth,

  Nice work on the article. Could you please clarify, if the banks would consider the interest earned on RD in Apr 2015 and May 2015 as well for considering the 10k limit. Or only the interest earned from Jun 2015 will be considered.

  Thanks,
  Swetha

  • Dear Swetha,
    I believe the banks will consider for full FY 2015-2016.

• Hi,
  Good works. Keep it up. Now coming to the point, does this cap on interest on FD/RD is based on interest income from FD and RD independently or combinely ? I mean for FD cap is 10k and for RD - 10k ? Or FD and RD together limit is 10k ?

  And also your suggestion regarding investing in RDs, whether to continue or not ?

  Advance Thanks.

  • Dear Sir,
    Banks have been instructed to deduct TDS on all interest payments exceeding Rs 10000 in any FY (as per Section 194A of IT Act).
    So, I believe that the Rs 10k limit is both combined. Also, the limit of Rs 10k is now not per bank branch but it is per bank.

    The decision to continue RDs or not depends on your financial goals. It is just that RDs have been made on par with FDs with respect to TDS.

    • Hi,
      I have a FD for 1 Lac in HDFC Bank & a RD of 1 Lac in UCO Bank . The intrest for both combined is more than 10 K . Kindly clarify if TDS will be deduced or not .

      • Dear Mahadevan ..No. But it is a taxable income.
        Read:
        TDS & Misconceptions.
        RDs/FDs - Tax implications.