Though FDs are seen as a relatively safe and reliable investment option, especially to earn dependable returns, if factors such as tax aren’t properly taken into account then those may not be as dependable as you may have hoped. Those who don’t take TDS into account when going about their financial planning can really stand to regret it based on the degree that taxes can diminish their returns.

Accordingly, there are a number of steps that can be taken to minimise the amount of TDS you pay on interest earned from an FD scheme, which could make all the difference. For starters, there is nothing as valuable as organised, effective financial planning to account for such tax deductions well beforehand and take steps to combat them accordingly.

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Tips to Save On TDS:

  • It’s all about timing – Currently TDS is charged on an FD if the interest earned in a given year is in excess of Rs10,000. By timing your FD scheme strategically, you could intentionally earn under the threshold and save on forking out heavy TDS bills. For example, getting a 1 year FD in the month of September will mean the interest earned on it will be split between two financial years, thus helping you stay under the threshold and so saving on TDS. Ironically, as a result of this, if a bank raises its interest rate during the tenure of the FD, it would mean you could earn higher returns in a given year, but also move into the tax-paying zone.
  • Divide and conquer – An alternate way of staying under the Rs.10,000 threshold is by dividing the investment into smaller chunks and splitting them up between various lenders so you’re not making your earnings in one place. To avoid the hassles of dealing with multiple banks and institutions, you can open multiple accounts with the same lender whom you trust to make things easier for yourself, which could also help achieve the same result.
  • Strength in numbers – Another way to keep under the Rs.10,000 limit is to open an FD scheme jointly with a family member, and put your name second. Typically, it is only the primary account holder who is tax liable, thus allowing you to potentially avoid a heavy tax deduction.
  • It’s all in the fine print – The above tips to minimise TDS are ineffective unless your returns and exemptions are declared properly. There are dedicated forms designed just for TDS: Form 15G and 15H, both of which must be filled correctly in order to inform the government if you are or aren’t eligible for TDS.

Furthermore, there is often confusion associated with how things are different when it comes to tax-saving FDs in terms of whether they are subject to the same taxes with regard to TDS. The answer is that with a tax saver FD, the initial amount you invest is tax exempt; however, the interest earned is subject to the same TDS rules as mentioned.


If you plan to invest in FDs, take note of this important information and ensure that you are saving as much as possible while enjoying the highest returns from your investment. As you search for the right way to invest in FDs, do consider Bajaj Finance Limited. With high credibility and stability ratings, good FD interest rates and over 200 branches across India to help serve your better, Bajaj Finance’s Fixed Deposit scheme may be the investment that is right for you.

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