TDS on Recurring Deposit RD

The Union Budget presented by Finance Minister Arun Jaitley proposes to bring recurring deposits under the provisions of TDS (tax deducted at source). As a result, if interest earned on recurring deposits exceeds Rs. 10,000 a year, TDS at the rate of 10 per cent would be deducted by the bank.

Recurring deposit is a special kind of deposit offered by banks and post offices in which investors deposit a fixed amount every month into their accounts. Some banks offer recurring deposits for tenures of up to 10 years.

Particulars
Tax on interest of Fixed Deposit
Tax on interest of RD
Tax on interest of Saving A/c
TDS applicability
TDS @10% on interest
TDS @10% on interest
No TDS
Income tax deduction allowed
Full interest taxable
Full interest taxable
Rs. 10000 deduction
Income tax rate
As per income tax slabs
As per income tax slabs
As per income tax slabs

The proposal to tax recurring deposits, a favourite saving instrument for salaried and middle class Indians, will come into effect from June 1.

Earlier, only fixed deposits in banks or post offices came under the ambit of TDS.

Investors with no taxable income will have to submit Form 15G to avoid TDS on both recurring deposits and fixed deposits. For senior citizens, the requisite form for avoiding TDS is 15H.

Share on Google Plus

About Nitin Aggarwal

    Blogger Comment
    Facebook Comment

0 comments:

Post a Comment