If you are also investing keeping in mind the good interest available on FD, then it is important to know that in which situation you can get income tax notice.
Often people get FD done to get good returns on FD. But, do you know that the interest earned on FD is put in the earning category only. That’s why you should take care of some things while getting FD, otherwise the Income Tax Department can also issue a notice to you due to the mistake you make.
If you deposit money in an FD in the name of your minor child or a housewife woman, then you have to pay tax on its interest. Actually, a part of the interest received in this situation is considered as earning and is counted in the income. Hence your TDS is also deducted.
If you have got FD, then while filing income tax return, there is a column of FD, in which you should give the information of FD. It is mentioned in the tax credit statement of Form 26AS. In case of any discrepancy in this situation, the Income Tax Department can give you a notice.
How much tax will be charged?- Normally banks deduct 10% TDS on interest income, but if you fall in the tax slab of 20 or 30% then you will have to pay additional tax.
The interest earned on FD is taxed according to the slab rate and surcharge. Suppose there is a total income of Rs 10 lakh in a year, then it will come in 30 percent tax slab. If the FD interest earns Rs 1 lakh, then tax of Rs 31,200 will have to be paid along with 30% tax and 0.4% cess. The rate of TDS on FD is 10%. In this year’s budget, the government has increased the limit of TDS deduction on FD to Rs 40,000. If you earn above this, then TDS will be deducted.
