TDS Threshold: Banks deduct TDS at 10% if your FD interest exceeds ₹40,000 per year (₹50,000 for senior citizens aged 60+).
5-Year Tax Saver FD: Investments in 5-year tax-saving FDs qualify for deduction under Section 80C up to ₹1.5 lakh per year. Lock-in period of 5 years applies.
Form 15G/15H: If your total income is below the taxable limit, submit Form 15G (below 60 years) or Form 15H (senior citizens) to your bank to avoid TDS deduction on FD interest.
Interest Taxation: FD interest is taxable as "Income from Other Sources" and taxed at your applicable income tax slab rate.
Quarterly Compounding: Most Indian banks offer quarterly compounding on FDs. Monthly compounding yields slightly higher returns.
Premature Withdrawal: Withdrawing FD before maturity usually attracts a penalty of 0.5% to 1% reduction in the applicable interest rate.