Tax Deducted at Source (TDS) means the tax which is deducted from any of your income. Many tax payers are troubled by TDS on salary or investment income. To avoid this, you can fill the form for refund from the Income Tax Department. Apart from this, there are many other measures through which you can avoid tax deduction.
When is TDS deducted?
Tax is deducted on income from certain sources after a limit (threshold limit). TDS depends on which bracket the taxpayer falls in. Apart from this, TDS is also different on different types of income. For example, if the dividend i.e. your share in the profit of a share company exceeds Rs 5,000, then the department will deduct TDS on it.
Save TDS by making more than one FD in different banks
At the same time, if you earn money from any bank’s savings account, FD or any other scheme, you will still have to pay tax. However it has a limit. This limit is Rs 40 thousand for common citizens, while it is Rs 50 thousand for senior citizens. If your income from these sources exceeds this given limit, then your income becomes taxable.
However, this rule applies to interest earned from a bank in a single financial year. That is, if you get FD done in different banks then you can get exemption in TDS. But for this it has to be kept in mind that the FD income in every bank should be less than Rs 40 thousand.
Income on FD is more than Rs 40 thousand, still TDS will not be deducted
If your income from an FD exceeds Rs 40 thousand, but if your income is less than Rs 2.5 lakh in the same financial year, then you can get tax exemption by filling Form 15G and 15H. This category includes people like housewives, students, whose income is less than Rs 2.5 lakh. But their FD income can be more than Rs 40 thousand. Because the earning person of their house can make FD in their name.
What is TDS?
If the remaining amount is given to you after deducting tax on your income, then the deducted amount is TDS. The government collects taxes through this. It is deducted on different types of income sources. Like salary, interest received on any investment or commission etc. Any institution (which comes under the purview of TDS) making the payment deducts a certain amount as TDS.
