TDS limit for interest income from bank FD hiked from Rs 40,000 in Budget 2025: Check details TDS is deducted by banks on interest exceeding specified limits, with current rules imposing a 10% rate if PAN is available and 20% if not
Budget 2025 proposes to increase the limit for tax deduction at source (TDS) on interest earned by general (non-senior) citizens from fixed deposits from banks from the present Rs 40,000 to Rs 50,000 per financial year. These amendments will take effect from the 1st day of April 2025.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Budget with ET
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What is TDS
Banks are required to deduct tax at source when interest paid to account holders exceeds specified threshold in one financial year. This threshold is different for senior citizens and non-senior citizens. Currently, banks are required to deduct TDS at the rate of 10% from interest paid on fixed deposits to account holders if PAN is available.
It is proposed to increase the threshold for requirement to deduct tax at source in section 194A as below.
PayerCurrent threshold to deduct TDSProposed threshold to deduct TDSA banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act)Rs. 40,000/-Rs. 50,000/-A co-operative society engaged in carrying on the business of bankingRs. 40,000/-Rs. 50,000/-on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalfRs. 40,000/-Rs. 50,000/-Any other caseRs. 5,000/-Rs. 10,000/-A cooperative society referred to in clause (v) and clause (viia) of sub-section (3) of section 194ARs. 40,000/-Rs. 50,000/-Source: Budget Memorandum
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Who deducts TDS on fixed deposit?
According to the HDFC Life website, As TDS is the tax deducted on income at source, any financial institution or bank offering investments in Fixed Deposit schemes is responsible for deducting TDS on fixed deposit interest. As a general practice, the TDS on Fixed Deposit interest is an automatic deduction that takes place at the end of every financial year.”
What are the Rules and Regulations of TDS on FDs?
According to the HDFC Life website, "Certain guidelines are issued by the Income Tax Department that must be abided by when it comes to the deduction of TDS on Fixed Deposit interest. The rules and regulations of TDS on FD are as follows:
TDS on FD is applicable only if the interest earned on fixed deposits exceeds the threshold limits in a given financial year.The bank or the financial institution in which the Fixed Deposit is held is responsible for deducting TDS on FD.TDS on FD is deducted at a flat rate of 10% rate in a given fiscal year where PAN details are available.The rate of TDS on Fixed Deposit interest increases to 20% if the PAN details of the investor are not available.In the case of Fixed Deposits held in joint names, the TDS on FD is made for the primary account holder. The second holder is not liable for any deductions relating to TDS on FD.The TDS on FD deductions happen at the end of each financial year when the interest is credited and not once at the time of the final maturity of the Fixed Deposit.Interest earned on Tax Saver FD is also subject to TDS deduction.All TDS deductions are reflected in the PAN account of the depositor." #sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
