Income Tax on Interest of Fixed Deposit
The Income Tax on Interest of Fixed Deposit is in general very higher than the interest rate paid to the regular savings account. It is under the governance of the Income Tax laws of India since interest is considered to be one of the major sources of the income. There are certain instructions given by the authorities of Income tax department to various banks and the financial institutions for deducing the income tax on the qualified fixed deposits.
When the total interest earned on the fixed deposits in the bank becomes larger than 10000 rupees, and then this would form the eligibility criteria for the deductions of Income Tax on Interest of Fixed Deposit. The tax deduction for the benefit of the tax liability is in general calculated at the branch level. The income tax deduction benefit is also available for those fixed deposits which are under the individuals below 18 years i.e. minors. In which case, the benefit of income tax deduction can be claimed by those persons authorized to take care of the income of the minor individuals.
Income Tax on Interest of Fixed Deposit will be deducted only based on the eligibility of the TDS and there after the interest fill be paid on to your fixed deposits by the bank. The rate of interest at which the deduction is made also depends on the type of the account that is maintained by the account holder. In addition it is done based on the rate of interest that is accrued at the financial year end. In general, the rate of interest the calculated for the fixed deposits depending on the quarterly basis is again invested back to the fixed deposit itself.
When the interest rates are calculated depending on the monthly basis then it will be very less than that of the rate based on quarterly basis.