According to the rules of FD, on receiving interest of more than Rs 40,000 on fixed deposit in a financial year, 10 percent TDS will have to be paid. On the other hand, if you get FD in the name of your wife, then you can save this TDS.
Bank FD: Amidst the growing interest of common people in mutual funds and stock market, bank FD still remains the safest investment. Investors get fixed and guaranteed returns in bank FD. This is the reason why even today a large section of the country considers investing in bank FD as the best and safest. Usually employed people get FD in their name. But if you get FD in the name of your wife, then you will not only get a huge return but can also save a lot of money.
TDS is deducted on interest of more than Rs 40,000
According to the rules of FD, on receiving interest of more than Rs 40,000 on fixed deposit in a financial year, 10 percent TDS will have to be paid. On the other hand, if you make an FD in the name of your wife, then you can save this TDS. Generally, in normal families, women are either in the lower tax bracket or are housewives. If your wife is a housewife, then understand that you will not have to pay any kind of TDS.
Exemption from TDS on taxable income less than Rs 2.5 lakh
Actually, people whose total taxable income is less than Rs 2.5 lakh are completely exempted from TDS on their FD. Along with this, you also have to understand that the interest received from bank FD is counted in your income. Suppose your total annual income is Rs 9 lakh and you have received Rs 1.20 lakh as interest on FD, then your total annual income will be considered as Rs 10.20 lakh and you will have to pay tax according to Rs 10.20 lakh.
You will also get benefits on joint FD account
But if you make an FD in the name of your wife, then you can avoid paying additional tax on the interest of FD. Apart from this, if you make a joint FD and make your wife the first holder, then in such a situation also you can save a lot.
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