Though fixed deposits or FDs are considered a reliably safe investment option, especially when it comes to higher yet assured ROIs, you could lose a part of earned profits, if you don’t figure out taxes well. Yes, fixed deposit investors who don’t give due importance to TDS when planning their finances can regret because it can diminish the ROIs.

However, there are a number of ways you can easily avoid paying TDS on Fixed Deposits. In the same context, let’s provide you some quick information on tips you can save on TDS.

1. Take care of the timings of your ROI

As you may be aware that TDS is currently charged on a fixed deposit if the interest gained in a year is in excess of Rs.10,000. As a result, by timing your FDs, you can earn under the threshold and save on paying large TDS bills. Getting an FD in September, for example, will mean the interest gained will split in two financial years. It means that you can easily earn your expected interest gains and avoid paying/saving on the TDS easily.

2. Divide your investment and conquer

Another prudent way of staying under the Rs.10,000 threshold is by splitting the investment into smaller amounts and not allowing it to earn Rs.10,000. You can easily open multiple FD accounts with the same lender to make things manageable for yourself.

3. Open a joint FD account

Another sure-shot method of keeping off under the Rs.10,000 mark is to initiate an FD plan jointly with a family member, and by putting your name second. You should know that only a primary member is liable for taxes, and can help you avoid paying a heavy tax.

4. Make sure to go through the fine prints twice

The above-discussed tips and tricks to keep off paying TDS on your fixed deposits are of no use unless you have declared your exemptions and returns properly. You need to know that there are special forms designed only for TDS. You can fill both forms such as Form 15G and Form 15H. A fixed deposit investor should ensure filling both these forms correctly to inform the Government that you are not eligible for TDS.

5. Bonus point – Open a tax saving fixed deposit

If you think your ROI of the FD will anyhow touch the Rs.10,000 mark even if you implement all tricks, it would be advisable to open a tax-saving fixed deposit. A tax-saving deposit is a plan in which you need to lock-down your money for a period of five years. You can also claim up to Rs.1.5 lakh as a deduction from your income under the Section 80C of the Income Tax Act. You can also not apply for a loan against such types of FD plans. Thus, if you think that you won’t need the money urgently, you can easily open a tax –saving FD with a bank or a non-banking finance company (NBFC) and enjoy benefits.

The Bottom Line

You should note that a Fixed Deposit Scheme is one of the major investment tools available that offers you safety, ROI assurance and much more. However, being aware of the Rs.10,000 as your interest gains to pay TDS should be another thing to watch out!
If you don’t play smartly, your purpose of investing in an FD won’t bear fruits as your gains will be gone in the form of the TDS deduction.

Thus, implement the discussed tips and avoid paying TDS so that your purpose of the investment is served without hassles. All the best!


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