Maximize Your FD Returns: Discover Interest Rate Changes from Leading Banks like IDBI and BOI to Invest Smartly for Higher Returns

Several major banks including IDBI, Bank of India (BOI), and Federal Bank have recently raised their fixed deposit (FD) interest rates. If you are considering opening an FD account these days, it’s crucial to be aware of the updated interest rates offered by these banks. 

We inform you that for FDs starting from 2 crore rupees or less, the respective interest rates provided by these banks vary. Therefore, depending on your preferences, you can make informed decisions about where to invest your savings.

Tax Implications on Fixed Deposits (FDs)

Interest earned from FDs is fully taxable. The interest you receive on an FD annually contributes to your yearly income. Your tax liability depends on your total income. Since the interest earned from FDs is counted as “income from other sources,” it is subject to taxation either at the source or under TDS. When your bank credits the interest to your account, it deducts TDS at that time. Let’s understand some tax-related issues regarding FDs:

1. If your total income is less than 2.5 lakh rupees in a year, the bank does not deduct TDS on fixed deposits. However, you may need to submit Form 15G or 15H for this purpose. In such a scenario, if you want to avoid TDS deduction, submit Form 15G or 15H with certainty.
2. If the interest earned from all your FDs in a year is less than 40,000 rupees, TDS is not deducted. If your interest income exceeds 40,000 rupees, a 10% TDS deduction applies. Banks may deduct 20% TDS if you do not provide a PAN card.
3. The threshold for TDS deduction on interest income exceeding 40,000 rupees applies to individuals below 60 years of age. For senior citizens aged 60 years or above, the interest income up to 50,000 rupees from FDs is tax-exempt. If the income exceeds this limit, a 10% TDS applies.
4. If the bank has deducted TDS on the interest earned from your FDs and your total income does not fall within the taxable limits, you can claim a refund of the deducted TDS when filing your taxes. This will be credited to your account.