TDS on Fixed Deposit for 2019-20 : Guide for Income Tax Planning.

Interests on fixed deposit (FD) are fully taxable, except for senior citizens, who now get exemption up to Rs 50,000 in a financial year.

For investors below 60 years of age, banks/other institutions deduct TDS (tax deducted at source) once the interest earned by an investor crosses Rs 10,000 (a proposal has been made in interim budget to increase the threshold limit to Rs 40,000).

For senior citizens, from the last financial year, TDS becomes applicable once the interest on Fixed Deposit crosses the threshold limit of Rs 50,000 in a financial year.

Once the threshold limit crosses, 10 per cent TDS becomes applicable, which the bank/institution cuts and deposits with the Income Tax Department.

For Tax planning of Income Tax, the process of  filing Income Tax Return only to claim back the TDS, investors may download and submit either Form 15G or 15H depending on their age.

Form 15G is applicable to those person, who are less than 60 years old and have FD interest of Rs 10,000 or more, but total taxable income is less than Rs 2,50,000.

Form 15H is applicable to investors with the age of above 60 years, once the interest income exceeds Rs 50,000, but the taxable income remains below Rs 3 lakh for senior citizens or below Rs 5 lakh for super senior citizens.

Any Fixed Deposit investor may deposit the Forms (15G or 15H depending on eligibility), provided his/her taxable income has not exceeded the maximum amount, which is not chargeable to income tax, on the date of submission of the form and he/she believes will not exceed in the financial year.

However, if the taxable income exceeds the the maximum amount, which is not chargeable to income tax, he/she should inform the bank/institution and withdraw the form.

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