Post Office Time Deposit Scheme: Post offices also offer tax-saving time deposit with a maturity period of 5 years carrying 8.50% per annum interest rate.
The interest is payable annually but compounded quarterly.
Also, though the interest paid is taxable but TDS is not deducted by the post offices.
Does post office deduct TDS on FD?
Section 80C of the Income Tax Act of India, 1961, allows tax deductions on the investment made within 5 years. The interest paid by the post office is subject to TDS. If no TDS is deducted, the same needs to be declared in the return of income.
How is FD taxed?
2) The interest income from bank fixed deposit is fully taxable, unlike savings bank account where one gets income tax exemption on the interest earned up to Rs 10,000 in a year. In case of FDs, banks deduct tax at source (TDS) at the rate of 10 per cent if the interest income for the year is more than Rs 10,000.
Is FD exempted from tax?
A person can invest in these FD’s through any public or private sector bank except for co-operative and rural banks. Accordign to current income tax laws, under Section 80C of the Income Tax Act, you can claim deduction for investments up to Rs 1.5 lakh in a financial year in tax-saving fixed deposits (FDs).
Is FD taxable on maturity?
Interest income from Fixed Deposits is fully taxable. This Tax is Deducted at Source by the bank at the time they credit the interest to your account, and not when the FD matures. So, if you have a FD for 3 years – banks shall deduct TDS at the end of each year. (See below for more details on TDS on FDs).