Suppose there’s an fd of Rs. 100000 @ 10% curiosity for a 12 months. Now after Q2, a TDS of Rs. 1000 was deducted, ignore the curiosity restrict breach half and that no 15g/h is there. Then for the remaining two quarters there might be no curiosity on the TDS quantity that has been deducted? I imply as a substitute of the maturity worth of Rs. 110000 as talked about on the fd certificates, the maturity worth might be 110000-1000(TDS)-Curiosity quantity on 1000 for two quarters? A SFB financial institution is saying that there isn’t a compounding profit on the quantity deducted as tds, not capable of perceive this half. By no means heard this earlier than in any financial institution.
Can somebody please clarify the way it works with a greater instance? Additionally from this monetary 12 months onwards what’s the curiosity restrict for seniors and non senior residents on which no tds is deducted?
tax007:
A SFB financial institution is saying that there isn’t a compounding profit on the quantity deducted as tds
Sure. They don’t have that cash. How will they compound it then?
1 Like
No TDS might be deducted as a result of your FD is only one Lakh. TDS is deducted solely when your curiosity exceeds 40k for normal taxpayers and 50k for senior residents. In any other case, there isn’t a TDS deduction. In case your principal quantity is greater, you possibly can submit Type 15G/H to keep away from TDS.Some banks calculate TDS based mostly on the whole curiosity earned from all FDs collectively,whereas others could deduct TDS based mostly on every particular person FD.
2 Likes
How maturity quantity of FD is calculated.
The maturity quantity that’s printed in your cumulative Fastened Deposit Receipt (FDR) doesn’t keep in mind the impression of tax which may be deducted (TDS) if the curiosity earned is greater than the federal government specified threshold. What this implies is that the maturity quantity printed in your FDR contains the extra curiosity earned because of compounding of inter even on the TDS quantity as it’s based mostly on default assumption that no TDS might be deducted. Subsequently, total calculation modifications if TDS is deducted.
Usually, TDS on a cumulative FD is mechanically deducted by the financial institution if the curiosity on the FD crosses a threshold specified by tax legal guidelines.
1 Like
Sir thanks for replying. The figures within the instance are hypothetical figures to make the case comprehensible and easy. The fds belong to a senior citizen with solely supply of revenue being fd curiosity. AFAIK the maturity worth ought to be, Principal quantity + Curiosity – TDS quantity however like I mentioned the financial institution is prepared to offer in mail that the quantity deducted as tds in q3 and this fall respectively gained’t be counted below compounding advantages. As per them as curiosity of fds is cumulative so tds deducted in q3 and this fall wont get any curiosity and therefore the maturity worth might be decrease then the worth which is talked about within the printed FD certificates given by them on the time of FD reserving. As per them maturity worth is, Principal quantity + Curiosity – TDS amount- No compounding curiosity on TDS deducted. Simply wish to know are they proper right here? Do all banks observe comparable approach of calculations if there may be TDS? Can we belief their system’s calculations right here or ought to one do the calculations manually to examine if the maturity worth given by them is correct or mistaken?
Is there any notification by RBI about this? Notification or one thing which says that tds deducted quantity won’t be given curiosity?
And lastly final 12 months if type 15g/15h have been submitted then no tds was to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
Sir thanks for replying. The fds belong to a senior citizen with solely supply of revenue being fd curiosity. AFAIK the maturity worth ought to be, Principal quantity + Curiosity – TDS quantity however like I mentioned the financial institution is prepared to offer in mail that the quantity deducted as tds in q3 and this fall respectively gained’t be counted below compounding advantages. As per them as curiosity of fds is cumulative so tds deducted in q3 and this fall wont get any curiosity and therefore the maturity worth might be decrease then the worth which is talked about within the printed FD certificates given by them on the time of FD reserving. As per them maturity worth is, Principal quantity + Curiosity – TDS amount- No compounding curiosity on TDS deducted. Simply wish to know are they proper right here? Do all banks observe comparable approach of calculations if there may be TDS? Can we belief their system’s calculations right here or ought to one do the calculations manually to examine if the maturity worth given by them is correct or mistaken?
Is there any notification by RBI about this? Notification or one thing which says that tds deducted quantity won’t be given curiosity?
And lastly final 12 months if type 15g/15h have been submitted then no tds was to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
Mam thanks for replying. So, is the financial institution proper once they say that maturity worth is, Principal quantity + Curiosity – TDS amount- No compounding curiosity on TDS deducted ? Like you might have talked about this fashion the maturity worth might be decrease than the maturity worth printed on the FDR.
Do all banks, PSU/Personal/Cooperative/SFB/NBFC’s, observe comparable approach of calculations if there may be TDS? Can we belief their system’s calculations right here or ought to one do the calculations manually to examine if the maturity worth given by them is correct or mistaken?
Is there any notification by RBI about this? Notification or one thing which says that tds deducted quantity won’t be given curiosity?
And lastly final 12 months if type 15g/15h have been submitted then no tds was to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
tax007:
The fds belong to a senior citizen with solely supply of revenue being fd curiosity.
You possibly can fill type 15g/h then. I agree that it’s cumbersome but it surely’s the way in which sadly because of tax guidelines.
Then the curiosity might be paid on entire quantity since TDS could be 0
And should you fill type 15g/h, I feel TDS won’t be lowered no matter whole curiosity revenue.
However yeah it is best to solely fill that if you’ll not be chargeable for revenue tax after counting all revenue in a monetary 12 months. To not keep away from TDS
tax007:
Is there any notification by RBI about this? Notification or one thing which says that tds deducted quantity won’t be given curiosity?
I don’t suppose such a notification exists.Financial institution is paying TDS to govt. So it isn’t affordable to anticipate them to pay you curiosity on cash they don’t have. It will be a loss for them. Hope you perceive.
I’ve few FDs and I don’t get FD curiosity on TDS paid
1 Like
@neha1101Mam this text corroborates what you might have talked about
The Financial Instances
TDS on cumulative FDs: Your cash loss is greater than the tax deducted
If the curiosity quantity earned in your FD goes past relevant threshold restrict inside any given monetary 12 months TDS is deducted by the entity with which you might be holding the FD. When TDS is deducted from the curiosity earned on a cumulative FD in a…
Few questions-
If type 15g/15h are submitted then no tds is to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
On this hyperlink TDS on FD: TDS on cumulative FDs: Your cash loss is greater than the tax deducted – The Financial Instances they’ve calculated Loss because of non-compounding of TDS within the desk. How is that this calculated? I imply for Case 1, 22985 (Whole TDS deducted) * 5.50 %( (Curiosity Price)= 1265/- however they’ve talked about the loss as 1035/- How has this been calculated?
My recognized senior citizen for whom I’m asking these queries, had mutliple fd’s. Now what the financial institution has completed is they didn’t deduct TDS from few fd’s however deducted extra tds from the remaining fd’s. The full TDS deducted is 10% of the curiosity credited + curiosity accrued quantity. It’s simply that for few fd’s the TDS deducted is NIL, whereas for the others they’ve deducted like 15-20% to match the whole tds deduction. Can this result in extra lack of curiosity or one thing for the accountholder?
Persevering with the above level, we wish to calculate the Loss because of non-compounding of TDS on all of the fd’s. What data ought to we ask from the financial institution to calculate that manually and the way precisely to calculate that?
@Rathi @tallerballerSirs please examine this put up and please share your useful steerage in regards to the queries
RBI hasn’t but carefully regulated these type of operational particulars, so this case would possibly nonetheless happen. Moreover, banks can deduct TDS whether or not your payout is month-to-month, quarterly or auto-renewal.For month-to-month and quarterly payouts, you obtain your curiosity on time however could miss out on compounding advantages. Together with this, if Type 15H submitted and your curiosity earnings in lakhs then additionally TDS could be deducted by financial institution. In such instances, you would want to say refund by ITR course of. Nonetheless, for payouts at maturity and auto-renewal, you possibly can profit from compounding regardless that TDS should be deducted.Each financial institution has its personal inner accounts usually referred to as dummy accounts, that are used to deal with these type of transactions, like transferring FD curiosity from one account to a different on payout day. This might impression your compounding advantages as a result of every financial institution has its personal methodology of calculating curiosity. It’s essential to examine how a lot tax has been deducted and from the place, for this you possibly can request TDS certificates, an curiosity certificates, full FD assertion out of your financial institution.
@Quicko may give us correct data.
1 Like
Really sir the fd in query is has the curiosity payout frequency: on maturity
About the remainder of your reply, please examine this put up Doubt relating to taxation on fd’s – #9 by tax007 it appears what that financial institution mentioned is true. Requesting you to share your form opinion in regards to the closing queries talked about in that reply.
tax007:
If type 15g/15h are submitted then no tds is to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
Sure. fundamental exception restrict is 3L in new regime for everybody. 3L just for senior residents in previous regime.
tax007:
they’ve calculated Loss because of non-compounding of TDS within the desk. How is that this calculated? I imply for Case 1, 22985 (Whole TDS deducted) * 5.50 %( (Curiosity Price)= 1265/- however they’ve talked about the loss as 1035/- How has this been calculated?
Not all TDS will get 5.5%. Curiosity is compounded quarterly and curiosity is every year. Loss calculation is variety of days the TDS would have grown (if not minimize) * 5.5/365.
They’re calculating compounding for that quantity because the day it’s minimize. So you can not do easy TDS * 5.5%
tax007:
Can this result in extra lack of curiosity or one thing for the accountholder?
You must ask financial institution why they didn’t minimize.
tax007:
The full TDS deducted is 10% of the curiosity credited + curiosity accrued quantity.
TDS each quarter will simply be 10% of quarterly quantity credited. Easy.
tax007:
What data ought to we ask from the financial institution to calculate that manually and the way precisely to calculate that?
You’ll get TDS certificates from financial institution. you are able to do
(Days left until maturity)/365) * 5.5% * TDS quantity
to get loss (approx).
Precise determine is advanced to calculate because of compounding. You’ll have to do each quarter to get actual determine after which add that for subsequent quarter on high of precept after which once more do it (compounding)
1 Like
tax007:
If type 15g/15h are submitted then no tds is to be deducted for non senior residents until 2.5 lacs curiosity and until 3 lacs for senior residents. Have they modified this quantity this 12 months?
No the restrict stays the identical.
tax007:
On this hyperlink TDS on FD: TDS on cumulative FDs: Your cash loss is greater than the tax deducted – The Financial Instances they’ve calculated Loss because of non-compounding of TDS within the desk. How is that this calculated? I imply for Case 1, 22985 (Whole TDS deducted) * 5.50 %( (Curiosity Price)= 1265/- however they’ve talked about the loss as 1035/- How has this been calculated?
In a FD the place the curiosity is paid on maturity, the compounding occurs each quarter. On this case the place TDS is computed, I imagine out of the whole curiosity you obtain 10% is deducted and paid out as tax and solely the stability might be used to compound. If the particular person has web banking, he can choose the deposit and see the schedule, it is going to clearly talked about, Curiosity quantity – TDS deducted.
So on your query which quantity get compounding, the quantity after deducting TDS.
Additionally unsure why you point out this as a Loss. If the quantity is throughout the particular person revenue tax ceiling, he can file returns and get the refund.
1 Like
tallerballer:
Sure. fundamental exception restrict is 3L in new regime for everybody. 3L just for senior residents in previous regime.
Sir once they say 2.5 lacs or 3 lacs, as per previous regime, does this imply internet revenue (after adjusting all deductions) or does it imply gross revenue?
tallerballer:
You must ask financial institution why they didn’t minimize.
They’re saying that its because of a technical error however to make up for this they deducted this tds quantity from the opposite fds. Is that this okay? Logically talking in the event that they forgot to deduct tds from a 1 lacs fd however later deducted that quantity from a 5 lacs fd, then is there any extra loss because of non-compounding of TDS?
tallerballer:
You’ll get TDS certificates from financial institution. you are able to do
(Days left until maturity)/365) * 5.5% * TDS quantity
to get loss (approx).
Precise determine is advanced to calculate because of compounding. You’ll have to do each quarter to get actual determine after which add that for subsequent quarter on high of precept after which once more do it (compounding)
Suppose tds deducted after Q1, so 90/365*Price of fd curiosity * TDS quantity? Doing this so each quarter will give us the quantity misplaced because of non-compounding of TDS on all of the fd’s? I perceive that that is very powerful and the financial institution may need been proper on their calculations half. However seeing the mess that they’ve created and seeing their responses we simply wished to double examine it. Is sensible?
neha1101:
No the restrict stays the identical.
Mam are you certain on this half? As a result of virtually all articles say that the edge for non deduction of TDS after submitting type 15G and 15H is 2.5 lacs and three lacs for non senior residents and senior residents respectively.
neha1101:
In a FD the place the curiosity is paid on maturity, the compounding occurs each quarter. On this case the place TDS is computed, I imagine out of the whole curiosity you obtain 10% is deducted and paid out as tax and solely the stability might be used to compound. If the particular person has web banking, he can choose the deposit and see the schedule, it is going to clearly talked about, Curiosity quantity – TDS deducted.
So on your query which quantity get compounding, the quantity after deducting TDS.
Additionally unsure why you point out this as a Loss. If the quantity is throughout the particular person revenue tax ceiling, he can file returns and get the refund.
Mam your final put up made this half clear. This hyperlink corroborates your level + they’ve given a desk within the article TDS on FD: TDS on cumulative FDs: Your cash loss is greater than the tax deducted – The Financial Instances which explains the Loss because of non-compounding of TDS on fd’s, about which I’m asking about. Are you able to please examine that when? That is what I’m asking as in how can we calculate this manually ourselves?
Yet one more factor, let’s imagine there have been fds of 1 lacs and 5 lacs. Now what this financial institution has completed is they didn’t deduct any tds on the curiosity earned from the 1 lacs fd however they’ve deducted its tds from the 5 lacs fd together with the tds relevant on the 5 lacs fd. Logically talking in the event that they forgot to deduct tds from a 1 lacs fd however later deducted that quantity from a 5 lacs fd, then is there any extra loss because of non-compounding of TDS which the accountholder will bear?
