TDS Rules (2024-25)
Tax Deducted at Source applies if interest exceeds:
- ₹40,000/year for general citizens
- ₹50,000/year for senior citizens
TDS is deducted at 10% if PAN is provided, 20% otherwise.
How to Avoid TDS
Submit Form 15G/15H if your total income is below the tax slab. Example:
- For a ₹10L FD @7%, submit Form 15G if your annual income < ₹2.5 lakh
- Seniors earning < ₹3 lakh can submit Form 15H
Tax-Saving FDs vs ELSS
While FDs offer guaranteed returns, ELSS funds (tax-saving mutual funds) have market-linked returns but 3-year lock-in. Compare:
| Feature | FD | ELSS |
|---|---|---|
| Returns | 6.5–7.5% | 12–15% (historical) |
| Risk | Zero risk | Market risk |
| Lock-In | 5 years | 3 years |
Post-Tax Return Formula
Post-Tax Interest = Total Interest × (1 - Tax Rate) Example: ₹5L FD @7% for 5 years (30% tax slab): Total Interest = ₹1,75,000 Post-Tax Interest = ₹1,75,000 × 0.7 = ₹1,22,500