Guide to TDS on Post Office Fixed Deposits

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A Post Office FD, also known as a time or term deposit, is a fixed deposit offered by India Post. You can invest risk-free for a term of 1, 2, 3, or 5 years thanks to the sovereign guarantee of the Government of India.

Since your earnings through Post Office FD are subject to taxes, the issuer may deduct tax before depositing the income in your account. This is called TDS or tax deducted at source and remitted to the Central Government.

You can submit form 15G or 15H to claim a TDS refund on Post Office FD against your total tax liability. Read on to learn about TDS on a Post Office FD and how it works.

Is TDS Deducted on Post Office FD?

If you’re wondering, “Is the FD by the Post Office taxable?”, then you should know that it is. The TDS on Post Office FD is applied depending on your interest income for the financial year according to the Post Office TDS rules.

As per Section 80TTB of the Income Tax Act, Post Office FD TDS is applicable only if the interest earnings exceed ₹40,000 annually for regular investors. Alternatively, the TDS on Post Office senior citizens schemes is applicable if the interest earnings exceed ₹50,000.

For Indian resident customers, the Post Office TDS rate for FD is charged at 10% on the interest earned beyond the exempted limit. If PAN Card information is not provided, then the post office TDS rate will be charged at 20%.

Refund of TDS on Post Office FD

You can claim a refund on TDS only when the tax amount already deposited in your name is more than the tax you owe.

This may occur in two instances:

If you do not have any taxable income
If your total income is under the tax exemption limit

If you have no taxable income, file a declaration to notify the issuer via form 15G at the start of the fiscal year. In case TDS on a Post Office FD is still deducted, you can claim a refund by filing your income tax return or ITR.

The same applies if your total earnings are below the minimum amount applicable for income tax. Senior citizens can also do the same by submitting form 15H.

Additionally, you can also request the issuance of TDS certificate by submitting Form 16 or Form 16A whichever is applicable in your case. You can also request a TDS certificate online by visiting the official website of the Income Tax Department of India.

How to Claim an Online Refund of the TDS on Post Office Fixed Deposit?

You can claim a TDS refund on fixed deposit through the official website of the Income Tax Department. Here are the steps you can follow.

Go to the official IT website: incometaxindiaefiling.gov.in
If you are a new user, complete your registration first
After registering, log in to the portal using your credentials
Select the relevant ITR form, enter the details needed and file your return
E-verify the acknowledgement using your digital signature, Aadhaar-based OTP or net banking

What is the Time Period of the TDS Refund?

The timeline of when you receive the refund of your TDS on Post Office FD is dependent on various factors such as when you have filed your IT returns and if your form has been e-verified. You can get your TDS refund on fixed deposit in as quick as 1 month after your ITR is processed or 3-6 months after submission.

In case you haven’t received your refund after filing and verifying your return, you can check Form 26AS that contains all TDS information by downloading it or contacting an IT officer near you.

You can also verify the status of TDS refund on fixed deposit on the official IT website by viewing your filed return and clicking on refund status. This is also possible on the NSDL website, where you can click on status of tax refunds under Services and enter the details asked for to know if your refund has been processed.

Knowing how a Post Office FD is taxed helps you choose a wise investment after considering your total earnings. An equally secure option is the Bajaj Finance FD which comes with high safety ratings. You can compare its FD interest rates as well as that of other company FDs with a Post Office FD to make the right decision. You can determine the maturity amount on your investment with an FD return calculator.

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How is a Post Office Fixed Deposit taxed?

A Post Office FD is taxed as per your income tax slab once your earnings through interest exceed ₹40,000 for regular investors and ₹50,000 for senior citizens. TDS on Post Office FD is applicable on interest earned beyond the exempted limit.

What is the deduction limit for tax-saving fixed deposits?

You can claim a deduction of up to ₹1.5 lakh per annum in a tax-saving fixed deposit as per Section 80C of the Income Tax Act, 1961. Remember, this type of Post Office FD requires you to choose a tenor of at least 5 years.

What is TDS on Post Office FD?

Commonly known as the tax on post office FDs, TDS is the tax due on your interest earnings. It is paid to the government by the issuer, in your name, before depositing the remainder in your account.

This is based on your earnings from an FD as well as your income and other details. However, you have the right to get a TDS refund on a fixed deposit if you do not have taxable income or total income is under tax exemption limit.

What if the TDS on Post Office FD is more than my total tax liability?

If the TDS on Post Office FD exceeds your total tax liability, you can claim a refund by filing ITR and submitting either form 15G or 15H, whichever applies. Processing a TDS refund on a fixed deposit is very simple and can be completed online.

Is TDS applicable on Post Office time deposits?

Yes, TDS is applicable on Post Office time deposits over the exempted limit. A TDS of 10% is charged on the interest earned from fixed deposits beyond the exempted limit. But if your Pan Card details are not submitted, a 20% tax rate is applicable.

What is a Post Office TDS Certificate?

A TDS Certificate for Post Office deposits is applicable when tax is withheld by the issuer on behalf of the investors. Form 16 or 16A is a certificate of source deduction that offers TDS/TCS information for numerous transactions between both the issuer and the investor. You can also apply for one online through the official website of the Income Tax Department of India.