Bank FD Rules: As per the FD rules, if you earn more than Rs 40,000 in interest on fixed deposits in a financial year, you will have to pay TDS at the rate of 10%. On the other hand, if you make an FD in your wife’s name, you can save this TDS.
Bank FD Rules: 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 done in their name. But if you get FD done in the name of your wife, then you will not only get huge returns but can also save a lot of money.
TDS is deducted on interest above Rs 40,000
According to the FD rules, if you receive interest of more than Rs 40,000 on fixed deposits in a financial year, you will have to pay TDS of 10 percent. 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 on Rs 10.20 lakh only.
You will also get benefit on joint FD account
But if you make an FD in your wife’s name, then you can avoid paying additional tax on the interest of the 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.
