Will I be subject to TDS provisions on the interest earned from my savings bank account or 5-year bank FD if I maintain a balance of around Rs 5-6 lakh?

I generally maintain a balance of around Rs 5-6 lakh in my savings bank account. I have also recently invested in a bank FD for Rs 5 lakh for three years. Please let me know whether my bank FD interest or savings bank interest will attract any TDS provisions.

Ankit

Reply by Rajiv Bajaj, Chairman & MD, BajajCapital Ltd.

Firstly, regarding savings bank accounts, it's worth noting that any interest earned on such accounts does not attract Tax Deducted at Source (TDS) as per the current provisions, regardless of the amount of interest income generated.

However, when it comes to interest earned on bank fixed deposits, the scenario shifts slightly. TDS is applicable at a rate of 10% if the total income from interest exceeds Rs. 40,000 within a single financial year. It's crucial to be aware of this threshold.

Furthermore, it's important to highlight that for senior citizens aged 60 years and above, the TDS rate of 10% is only applied if the annual interest income from bank fixed deposits surpasses Rs. 50,000. This distinction is particularly significant for our elder clients, ensuring they remain informed about their financial affairs.

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