As result of new proposal in
the Union Budget 2015-16, Banks and Post Offices will have to deduct the 10% of
the interest on Recurring Deposits (RD) as TDS from 1st June 2015 onwards. The
TDS will be applicable only if the interest earned on RD accounts exceeds Rs.
10000/- a year.
Interest earned on deposits in
cooperative banks has also been brought under TDS. Earlier there was no TDS for
Recurring Deposits in all institutions, only interest on fixed deposits was
taken for TDS calculation.
Investors with no taxable
income will have to submit Form 15G to avoid TDS on both recurring deposits and
fixed deposits. For senior citizens, the requisite form for avoiding TDS is
15H.
The rules for applicability of
TDS on interest income from bank deposits have also been changed. Earlier, TDS
was applicable if the interest earned on deposits in a particular branch of a
bank was more than Rs. 10,000 in a year. Now, the branch restriction has been
removed. The total interest on multiple deposits at different branches of the
bank would now be considered together for the purpose of calculating
TDS.
This new rule will make impact
on investors who makes deposits in different branches of a particular bank in
order to escape from the TDS.
These new proposal will make
impact on the business of the banks and Post Offices who deals with large number
of RD accounts. Because if the TDS is collected from a depositor, he will have
include this interest income as part taxable income in his Income Tax returns.
Otherwise mismatch will be happened since the TDS has been linked with his
PAN.
Income Tax on such interest on
RD accounts would be levied as per the Income Tax Slab Rates of the person
receiving the interest. The current income tax slab rates can be divided into
the Nil category, 10% category, 20% category and the 30%
category.
The person receiving the
Interest on RD cannot claim any deduction on the same and tax would be levied on
the full interest amount as compared to Interest on Savings Account on which a
deduction of Rs. 10,000 is allowed.
SOURCE:INDIA POST PARIWAR
Thanks admin to share this information .Before reading this post i have no idea about Recurring Deposit now i get some idea about RD nice blog.
ReplyDeleteRegards,
Arjun