Everything you needed to know about tds on fd rates

03 Jul 2019

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A bank or financial institution is required to deduct TDS (tax deducted at source) at 10% from the interest income you earn on your fixed deposits and remit it to the central government, if the interest income exceeds Rs.10,000 in a financial year..

TDS is tax deducted at source. It is that part of your income that is directly paid out in the form of tax by the deducting agency, like your employer or your bank, before passing on the rest of the income in your hands.

In the Union Budget 2018, the Finance Ministry had increased the interest income threshold to Rs.50,000 for senior citizens. Only on exceeding Rs.50,000 as interest income, can the bank deduct TDS for senior citizens or those 60 years of age and above, under the new Section 80TTB of Income Tax Act.

When you have more than one deposit in different branches of the same bank, then the interest income from all the FDs is added up and 10% of this cumulative value is deducted as TDS.

What if a depositor’s annual income is below taxable income bracket?

Now, if a depositor’s annual income is less than Rs.2.5 lakh a year, and Rs.3 lakh in case of senior citizens, then the depositor is liable to pay no taxes. Under those circumstances, the depositor must submit Form 15 G or 15H right at the beginning of the year to prevent TDS from getting deducted from their interest income. Failing which, the depositor will have to file for refund at the end of the year, which can be tedious.

What is Form 15G and 15H?

Form 15 G

When a depositor’s annual income is less than Rs.2.5 lakh (or Rs.3 lakh for senior citizens) and tax due is nil, then the depositor must file Form 15G or Form 15H with the bank requesting the bank to not deduct TDS on interest income from FDs exceeding Rs.40,000 or, in the case of senior citizens, Rs.50,000.

Form 15H

Form 15H is similar to Form 15G, except that Form 15H is exclusively for senior citizens who are 60 years and above in age.

Conditions For Form 15H

  • The depositor should be 60 or above of age
  • Annual income should be less than Rs.3 lakh in case of senior citizens and Rs. 5 lakh for super senior citizens.
  • Should be a resident Indian.

Some examples of Form 15G/H

Mrs. Dsouza is 35 years old. Her annual income is Rs.2,35,000. The interest receipts on her FDs are Rs.50,000. What should Mrs. Dsouza do?

Mrs. Dsouza needs to submit Form 15G because her annual income is lower than Rs.2.5 lakh which is the minimum taxable income threshold. Since, her interest income is Rs.50,000, which is Rs.10,000 higher than the TDS exemption limit, the bank will deduct TDS at 10% if she does not file proof of her zero tax dues through Form 15G. So to prevent her loss of interest income by TDS deduction, she must file the form 15G before her first interest income is received.

Mr. Raina is 66 years old. His annual income is Rs.2,20,000 and his interest income is Rs. 60,000. What should Mr. Raina Do?

The minimum taxable income limit for Mr. Raina’s age group is Rs.3 lakh. Since his annual income is less than that, it means his taxable income is zero. So he should file Form 15H with his bank to prevent TDS deduction on his interest income which is higher than the exemption limit of Rs.50,000 for senior citizens.

In the above example, what if Mr. Raina’s interest income is Rs. 30,000 from his FD?

Since, his interest income is less than Rs.50,000 exceeding which, the bank comes into the picture and deducts TDS at 10%, Mr. Raina does not have to do anything, given that his annual income is also below minimum taxable income limit.

Please remember

  • You must submit Form 15G or Form 15H along with a valid PAN, failing which the TDS would be deducted at 20%.
  • Form 15G/H has to be submitted to all the bank branches where you are receiving interest income from.
  • If you have multiple FDs and interest income from even a single branch exceeds Rs.10,000 in a financial year, then you must file Form 15G/H to prevent TDS deduction.

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Everything You Need To Know About Sovereign Gold Bonds

That Indians love investing in gold, is no hidden secret. We buy gold on big and small occasions. Gold is considered an excellent investment in India, irrespective of the form in which it is purchased. However, when you buy gold jewellery, you end up paying a lot more in making charges. How, then, can you benefit from gold in the long term? Well, you can invest in sovereign gold bonds. Let’s find out what is a sovereign gold bond and other essential facts about it.
What is sovereign gold bond?
Introduced in 2015 by the Government of India, sovereign gold bonds were launched under the Gold Monetisation Scheme. The Government issues gold bonds every year (since 2015). Gold is issued in tranches by the RBI, in consultation with the Government.
Under the scheme, bonds are denominated in multiples of grams with the minimum unit being 1 gram gold. The Government offers interest of 2.50% per annum on gold bonds, which is paid semi-annually.
Essential facts about the sovereign gold bond scheme
Having explained what is sovereign gold bond scheme, here’s a look at some crucial facts about this scheme.

Sovereign gold bonds are provided for tenures of up to 8 years. However, one may exit the bond only after the 5th year. You may exit the scheme only on the interest payment dates on the 5th, 6th and 7th year.
You may subscribe for a maximum limit of up to 4 kilograms gold if you are an individual subscriber or a member of a Hindu Undivided Family in a fiscal year (Apr-Mar). Trusts and charitable entities can subscribe for up to 20 kilograms of gold.
Under the Government Securities Act of 2006, Gold bonds are issued as stocks and investors are provided with a holding certificate for the shares issued.

Basic Features and benefits of sovereign gold bond schemes
Now that we know what is gold bond scheme let’s look at the basic features and advantages of the scheme.

You can hold your gold bonds in paper form or demat form, whichever you find convenient.
You can buy gold bonds in multiple weight denominations with 1 gram being the minimum weight.
Investing in the gold bond is rather flexible as you have the option to choose the amount you wish to invest
You can earn interest on your gold bonds semi-annually
You do not have to worry about storing the gold since it is issued in certificates or demat form and not in the physical form.
The sovereign gold bond scheme is backed by the Government, making it one of the safest schemes, in that the investor does not have to worry about the purity of the gold.
While the scheme matures after eight years, you can prematurely withdraw from it after five years

Final word: Knowing what is gold sovereign bond is essential before investing. Speak to your investment advisor before you invest in the scheme.
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Features & Benefits Flexible Recurring Deposit Scheme

Flexible Recurring Deposit Scheme (Yatha Shakti Jama Yojana)
Bank of Baroda offers its customers a unique scheme that makes it possible for you to save money flexibly, month after month. You can avail the attractive Yatha Shakti Jama Yojana - a flexible recurring deposit scheme which comes with a host of benefits and salient features. Under the flexi recurring deposit scheme, depositors may choose a small core amount to open their deposit and increase the core amount subsequently, up to three times.
Features of the Flexible Recurring Deposit Scheme
Opening the flexi RD
The flexi RD can be opened with a small initial amount of Rs.100 only
Amount of deposit
Depositors may choose their initial amounts in multiples of Rs 100, up-to a maximum amount of ₹10,000. You may choose to deposit either your core amount or up-to 3 times your core amount. Core amount contributions are mandatory in this scheme.
Tenure of deposit
The tenure of the recurring deposit schemes range from 12 months to 120 months.
Interest payment
Interest on the flexi RD will be paid and credited on a half yearly basis in the months of September and March. The interest paid is calculated on daily balances, with half yearly compounding of interest.
Benefits of the Flexible Recurring Deposit Scheme
Additional interest rate benefits
Senior citizens with deposits below ₹1 crore are eligible for 0.50% additional interest. Staff and ex-staff members of Bank of Baroda are also provided with additional interest. Ex-staff members who are senior citizens can avail both bonus interest rates.
Nomination facility
Nomination facility is also offered to flexi RD holders.
Premature withdrawal facility
Interest is paid after deducting a penalty of 1% from applicable rates or contracted rates, whichever is lower in only those cases that are subject to charging penalty.
Loan and overdraft facility
You may avail a loan or overdraft facility against the flexi RD of up to 95% of the outstanding balance in your account at interest rates as per Bank of Baroda guidelines.
No penalty
No penalties are levied for delayed payments of monthly instalments.
No TDS will be deducted for persons submitting forms 15G/15H as applicable

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