INSUBCONTINENT EXCLUSIVE:
Authors: JordanBank FDs: Senior citizens are entitled to higher income deductions on interest income from this fiscal.For investors looking
for a guaranteed or regular income, bank fixed deposits or bank FDs remain very popular investment options
Many banks offer the options of opening fixed deposits online
Maturity period of up to 10 years are also offered by some banks
Premature closures of fixed deposits are subjected to applicable charges
Investors can earn interest monthly/quarterly/half-yearly or yearly basis according to their convenience
Fixed deposits also come with loan/overdraft facility against fixed deposits
SBI, for example, offers loans/overdraft facility of up to 90 per cent of the principal deposit, according to the bank's website.1) From
this financial year, starting April 1, 2018, senior citizens will get higher interest income exemption limit on deposits in banks and post
offices, including recurring deposits
Under the new tax laws, a new Section 80TTB has been inserted to allow a deduction up to Rs.50,000 in respect of interest income from
deposits held by senior citizens
Currently, a deduction up to Rs
10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account
However, no deduction under Section 80TTA shall be allowed for senior citizens.For senior citizens, it does not matter whether deposit with
banks or post offices in question was made before or after April 1, 2018, says Srinivasan Anand G of Taxmann
Interest income is deductible only if it is from deposits with a bank or co-operative bank or post office, he says.2) TDS Provisions: Banks
deduct TDS or tax deducted at source at the rate of 10 per cent on the interest earned on fixed deposits, if the interest income for the
From 2015, TDS provisions have also been made applicable on the interest earned on recurring deposits.3) You can access the details of TDS
deducted by viewing your Form 26AS
This is basically your tax credit statement which shows all taxes received by the Income Tax Department
You can access Form 26AS from the tax department's website
This helps you ascertain whether the tax deducted has been correctly deposited with the government
"It is extremely important to go through the Form 26AS to ensure that all due credits for TDS deducted from a person's salary, FD interest,
are duly accounted for," said Sandeep Sehgal, director of tax and regulatory at Ashok Maheshwary Associates LLP
In case of mismatch in tax credit, investors should approach the banks, says tax experts4) It should be noted that all bank fixed deposits
are not eligible for income tax benefits
Under Section 80C on the Income Tax Act, investment in a bank FD in a scheduled bank with maturity of five years or more is eligible for
deduction, subject to a maximum of Rs 1.5 lakh
For example, SBI offers tax-saving fixed deposit for a minimum tenure of five years and maximum of 10 years under tax-saving scheme
There is lock-in period of five years in case of tax-saving bank FDs and you can't avail any loan against the term deposits opened under tax
savings scheme.5) Form 15G/ Form 15H: Many banks allow fixed deposit holders to submit their 15G/15H forms online
Forms 15G/15H are self-declaration forms by an individual stating that his or her income is less than the taxable limit
To prevent the bank from deducting TDS, depositors can submit Form 15G /15H with the bank
If one fails to do so, the person will need to claim the tax refund by filing his/her income tax return.(Except for the headline, this story
has not been edited by staff and is published from a syndicated feed.)
