Discrepancy in FD Maturity Payout from IndusInd Bank – A Case to Review

[dvader]

Excellent insights! On the Internet, I've always found contradicting rules about when to file Form 15G and when to not.

Here's a helpful table for you all:
View attachment 92253

In simple words, you can file Form 15G to get relief from TDS deduction only if your total income is below ₹4L if you'd file ITR under new regime, and ₹2.5L if you'd file it under old regime.

I look it as govt trying to scam normal tax exempt citiznens to give itself an interest free loan. Irony...RBI makes interest free loans illegal for citizens but if govt does it....well it's alright.

Just move FDs taking interest above 50k (or 1L for SrC) to another bank and pay taxes at ITR filing (if applicable)

 

[CosmicCat]

I look it as govt trying to scam normal tax exempt citiznens to give itself an interest free loan. Irony...RBI makes interest free loans illegal for citizens but if govt does it....well it's alright.

Just move FDs taking interest above 50k (or 1L for SrC) to another bank and pay taxes at ITR filing (if applicable)

Or rather invest in debt mutual funds, redeem the amount you desire from the invested funds when required, and pay the applicable STCG Tax (if any) while filing ITR. Simple. 😛

 

[sun156]

I look it as govt trying to scam normal tax exempt citiznens to give itself an interest free loan. Irony...RBI makes interest free loans illegal for citizens but if govt does it....well it's alright.

Just move FDs taking interest above 50k (or 1L for SrC) to another bank and pay taxes at ITR filing (if applicable)

Which MOSTLY SAVES FROM COMPOUNDING effect on INTREST bcz
When TDS amount cuts we looses Intrest and also compounding effect on it by which every one misses actual INTREST making the net yeild on FD decreases.

So by this above @dvader mentioned way we can even save that
And escape TDS and maintain genuine filing at ITR without legal complications
Win win situation

 

[desiviru]

Finally someone putting it right. 12L is not the slab. The slab starts at 4L. And it's for this reason, I keep FDs in mutiple accounts. Even if total income exceeds 12L, you can still pay taxes. It's not worth wasting time and energy at least not for 15G. 15H still makes sense if you are getting more than 5K+ with staff promo or some other reason keep FDs with one CIF.

Ujjivan explains it better

Taxation (TDS) on Fixed Deposit Interest (FY 2025-26)

Your FD interest income is fully taxable. However, the changes in tax slab and TDS exemption limit can help you save tax. Here's how.

www.ujjivansfb.in

Atleast the writer at Ujjivan understand what is correct. 🙂 Since many years I have been advising people not to use 15G/15H as they may get into trouble by tax department but they listen to their CAs who just tell them they will manage and client dont need to worry. Tax Department also taking no big interest as they can't go through everyone estimated income. But AI in future will figure it out. Same is the case with Advance Tax. People who have tax liability of over 10K and gets rebate also think they dont need to pay advance tax. But that is not correct. Paying tax is fundamental right and getting refund procedurally is correct thing to do.

Just for fun: If a card is launched with 5% cashback on advance tax payments, trust me most will do it in excess. lol

 

[desiviru]

I look it as govt trying to scam normal tax exempt citiznens to give itself an interest free loan. Irony...RBI makes interest free loans illegal for citizens but if govt does it....well it's alright.

Just move FDs taking interest above 50k (or 1L for SrC) to another bank and pay taxes at ITR filing (if applicable)

The TDS deduction itself reduce income by 10 basis points every year. So yes even I call it a legal scam from Govt. But then paying advance tax will nullify it. So TDS is good in that sense. Just see it as advance tax payment.

Some people have staff account and they never move their FDs like my father retired from SBI and he keep his FDs there only as getting extra 1% staff benefit. Was getting 8.75% on 444 days but now interest rates reducing. Fortunately his FDs were on renewals till March 21st and all renewed between Dec-Mar. Now int rates down by 0.50%.

 

[Arnal07]

Just to add a quick clarification here:
For Form 15H, the rule has always been that your total tax liability should be nil. So, for the current financial year, this applies if your total income is below ₹12,00,000.

As for Form 15G, the interest income exemption limit still remains ₹2,50,000 if you're filing under the old tax regime. The higher limit of ₹4,00,000 only applies if you opt for the new tax regime.

This year, I've noticed some banks to ask the regime they'd be filing tax under while filling out Form 15G/H online.

Post in thread 'SBI Deducted ₹5,000 From the Principal Amount Upon FD's Maturity'

Thursday at 10:08 PM

Very tricky situation, given form 15H for all deposits except one declaring that your taxable income is less than 250000. In one deposit,form 15H not given and intrest paid is crossing 50000 at CIF level. For senior citizens,no TDS will be deducted upto 50000 intrest earning.

Form 15H can be submitted when your tax liability is zero unlike form 15G which can only be submitted when total income is below the basic exemption limit.

• Arnal07

• 

This is exactly what I said in one of your previous threads.

 

[psmangat5]

this happens when the TDS of not just this FD, but all your FD's last FY interest are deducted together against that one last maturing FD for the FY... Plus no interest is paid on the TDS already deducted every quater as that amount is remitted to the government so banks don't pay interest on it

 

[desiviru]

this happens when the TDS of not just this FD, but all your FD's last FY interest are deducted together against that one last maturing FD for the FY... Plus no interest is paid on the TDS already deducted every quater as that amount is remitted to the government so banks don't pay interest on it

Yeah that's how by deducting TDS, Govt giving indirect benefits to banks who have to pay less as the maturity amount without TDS is always more. The benefit of quarterly compounding becomes less. But that is very much little as I told above. For every 1 crore @7.25 to 8.75 % the impact is meagre at Rs.2247 to Rs.2652. When you pay advance tax like 15%, 45%, 75% followed by 100% till March this evens out everything. So TDS deduction not having a bigger impact.

As many suggested here if you dont want TDS deduction, have FDs in different bank accounts and keep interest below 50K or 1L (Sr Citizens). Or if say in family mother/wife are homemakers, transfer money to their account as a loan and they will have 15G/15H eligibility if you keep interest income till 5L/4L.

 

[hender]

Young people। Young Idea।

Yeah that's how by deducting TDS, Govt giving indirect benefits to banks who have to pay less as the maturity amount without TDS is always more. The benefit of quarterly compounding becomes less. But that is very much little as I told above. For every 1 crore @7.25 to 8.75 % the impact is meagre at Rs.2247 to Rs.2652. When you pay advance tax like 15%, 45%, 75% followed by 100% till March this evens out everything. So TDS deduction not having a bigger impact.

As many suggested here if you dont want TDS deduction, have FDs in different bank accounts and keep interest below 50K or 1L (Sr Citizens). Or if say in family mother/wife are homemakers, transfer money to their account as a loan and they will have 15G/15H eligibility if you keep interest income till 5L/4L.

Finally 😉

 

[psmangat5]

Yeah that's how by deducting TDS, Govt giving indirect benefits to banks who have to pay less as the maturity amount without TDS is always more. The benefit of quarterly compounding becomes less. But that is very much little as I told above. For every 1 crore @7.25 to 8.75 % the impact is meagre at Rs.2247 to Rs.2652. When you pay advance tax like 15%, 45%, 75% followed by 100% till March this evens out everything. So TDS deduction not having a bigger impact.

As many suggested here if you dont want TDS deduction, have FDs in different bank accounts and keep interest below 50K or 1L (Sr Citizens). Or if say in family mother/wife are homemakers, transfer money to their account as a loan and they will have 15G/15H eligibility if you keep interest income till 5L/4L.

How it is benefit to banks? When they have already remitted the tax money to govt why should they pay interest to customer on that money?

 

[dvader]

How it is benefit to banks? When they have already remitted the tax money to govt why should they pay interest to customer on that money?

If they hadn't given the money to Govt, they would have to pay interest, which they now don't have to. And the bank does settlement is bulk, Rs 400-500 transfer wont make sense. So they enjoy the free money + the lost interest to customer balle balle

 

[desiviru]

How it is benefit to banks? When they have already remitted the tax money to govt why should they pay interest to customer on that money?

Bro, you are reading between lines and not understanding. Who is saying they should pay interest to customers for money remitted to Govt?

Veeray, dhayan nal padd lae fer response de. Avve naa maari jaa apni.



Yes they deduct and remit money to Govt against our PAN.

Now on this reduced money they don't have to give more interest. As interest is paid by banks and not Govt.

Example: You have FD worth Rs.1000000 (10 Lakh) opened on April 1 with 7% interest. The quarterly compounding is as follows,

Q1= (1000000*7%/100)/4= Rs.17500 TDS: 1750. New Principal for next qtr= Rs.1000000+17500-1750= 1015750 instead of 1017500.

Q2 case: Interest if no TDS was deducted= ((1000000+17500)*7%/100))/4 = Rs.17806.25

But as TDS deducted, interest for Q2 is= ((1000000+15750)*7%/100))/4= Rs. 17775.62

Now due to TDS deduction depositor is getting Rs.30.63 less and bank benefitting because they had to pay this amount if no TDS was there. Overall benefit of Rs.30.63 for Q2.

Q3: Interest reduces by Rs.62 and Q4: Rs.95 due to TDS deduction of 10%.

I have excel sheet and real impact calculation on FD. For a 10L FD, bank is saving Rs.188 every year due to this and people get this much less.

For 50L FD for 5 years at 7% rate bank savings Rs.5165.80 in interest outflow.

This is a well engineered thing between Govt and banks and by TDSing FDs they are saving crores of rupees in interest outflows.

If still you are thinking otherwise, time for you to go back to school and attend mathematics class.

 

[psmangat5]

Bro, you are reading between lines and not understanding. Who is saying they should pay interest to customers for money remitted to Govt?

Veeray, dhayan nal padd lae fer response de. Avve naa maari jaa apni.



Yes they deduct and remit money to Govt against our PAN.

Now on this reduced money they don't have to give more interest. As interest is paid by banks and not Govt.

Example: You have FD worth Rs.1000000 (10 Lakh) opened on April 1 with 7% interest. The quarterly compounding is as follows,

Q1= (1000000*7%/100)/4= Rs.17500 TDS: 1750. New Principal for next qtr= Rs.1000000+17500-1750= 1015750 instead of 1017500.

Q2 case: Interest if no TDS was deducted= ((1000000+17500)*7%/100))/4 = Rs.17806.25

But as TDS deducted, interest for Q2 is= ((1000000+15750)*7%/100))/4= Rs. 17775.62

Now due to TDS deduction depositor is getting Rs.30.63 less and bank benefitting because they had to pay this amount if no TDS was there. Overall benefit of Rs.30.63 for Q2.

Q3: Interest reduces by Rs.62 and Q4: Rs.95 due to TDS deduction of 10%.

I have excel sheet and real impact calculation on FD. For a 10L FD, bank is saving Rs.188 every year due to this and people get this much less.

For 50L FD for 5 years at 7% rate bank savings Rs.5165.80 in interest outflow.

This is a well engineered thing between Govt and banks and by TDSing FDs they are saving crores of rupees in interest outflows.

If still you are thinking otherwise, time for you to go back to school and attend mathematics class.

Oh bharava, why do you think bank is benefiting? Banks need money to lend this money is going out in form TDS even Bank Management and Unions asked government to reduce Taxes and TDS on Fixed Deposit as banks are facing deposit crunch. Mainu calculations na I am onvvery Senior Post in a Bank.

 

[desiviru]

Oh bharava, why do you think bank is benefiting? Banks need money to lend this money is going out in form TDS even Bank Management and Unions asked government to reduce Taxes and TDS on Fixed Deposit as banks are facing deposit crunch. Mainu calculations na I am onvvery Senior Post in a Bank.

Your reply answered about you more than the case being discussed.

Still not getting it? Go back to school and I am serious about it. 🙂

Banks facing deposit crunch because of meagre 10% TDS outflow? Seriously? What about 12-16% they get every month from that lending?

If you are on a Senior post in bank and still not able to get it then on Monday, go to your bank and ask your juniors what they think about you and get an honest review from them. They will teach you simple things.

Kehenda, mainu calculation naa sikha. Kyu naa dassa jadd tainu aanda hi ni. Hun tak te avve aakh reha siga ki jivve koi benefit hai ni jado explain karta taa hor galla maari janda.

 

[dvader]

Oh bharava, why do you think bank is benefiting? Banks need money to lend this money is going out in form TDS even Bank Management and Unions asked government to reduce Taxes and TDS on Fixed Deposit as banks are facing deposit crunch. Mainu calculations na I am onvvery Senior Post in a Bank.

@desiviru , the second word....is it something in punjabi or is it what I think it is?

You are senior, act like one. Your words don't match the stature you are conveying. Even if @desiviru was wrong in his analysis and even if you got hurt by go back to school comment, you could have come up with a befitting pun or a more detailed explanation.

Rudeness is the weak man's imitation of strength.

 

[psmangat5]

You are senior, act like one. Your words don't match the stature you are conveying. Even if @desiviru was wrong in his analysis and even if you got hurt by go back to school comment, you could have come up with a befitting pun or a more detailed explanation.

Rudeness is the weak man's imitation of strength.

Because I have already answered, Banks will not pay interest on TDS already paid to the government, Second thing, the point he's mentioning that bank is benefiting is baseless, as I have already told, banks are looking for deposits as they make money by lending not by chindi chori like he's calculated. Bank is paying 7% as per his calculation, so for next quarter if 95₹ is gone in taxes, banks will raise new deposits of 95 to maintain its ALM, even if they have to take it at higher rates in form of Bulk Deposits. Banks are not benefited by TDS, they have to mobilize more deposits because Govt is taking a chunk (however small it may be) .

 

[Trust Me]

For a 10L FD, bank is saving Rs.188 every year due to this and people get this much less.

For 50L FD for 5 years at 7% rate bank savings Rs.5165.80 in interest outflow.

This is a well engineered thing between Govt and banks and by TDSing FDs they are saving crores of rupees in interest outflows.

I am puzzled! How does the bank benefit when rather than paying interest to the depositor (in the form of compounded interest) they are paying that amount instead to the Government every quarter? Yes, they don't have to pay further interest on that amount, but they don't have that money with the bank anymore to lend out either. It's like they don't have to pay interest on money that wasn't deposited with them!

The only benefit they have is having use of free money from the time of deduction from the depositor's account to the time they actually pay the money to the Government. It can be looked at this way also that that's a benefit they have at a cost to the Government who receive delayed tax.
.

 

[desiviru]

@desiviru , the second word....is it something in punjabi or is it what I think it is?

You are senior, act like one. Your words don't match the stature you are conveying. Even if @desiviru was wrong in his analysis and even if you got hurt by go back to school comment, you could have come up with a befitting pun or a more detailed explanation.

Rudeness is the weak man's imitation of strength.

Don't worry bro. We Punjabis argue like this. Not fighting but that's how we go around.

He @psmangat5 is like my brother and I don't care who he is, I always teach people with right frame of mind. 🙂

Bharava, kithey appa likheya ki bank should pay interest on deducted TDS. You are reading everything in wrong context. We are blaming Govt here not banks. Banks are just doing their duties and this TDS deduction is actually helping them with less money outflow. Even if they don't want it, they are getting benefitting due to section 194 which allows TDS deduction on bank FD.

Aa lae chaa pee. ☕ Mai sufi banda waa, aes karke drink ni offer kar sakda. 🤣

 

[desiviru]

I am puzzled! How does the bank benefit when rather than paying interest to the depositor (in the form of compounded interest) they are paying that amount instead to the Government every quarter? Yes, they don't have to pay further interest on that amount, but they don't have that money with the bank anymore to lend out either. It's like they don't have to pay interest on money that wasn't deposited with them!

The only benefit they have is having use of free money from the time of deduction from the depositor's account to the time they actually pay the money to the Government. It can be looked at this way also that that's a benefit they have at a cost to the Government who receive delayed tax.
.

Had the Govt not asked for TDS on FD, banks would be paying more money out of their pockets,. What's confusing in that is beyond my understanding?

If you had to pay me Rs.10 for a Rs.100 I despoited but due to TDS you are finally paying Rs.9.50 who is saving this Rs.0.50? 1 ka TDS Govt ko chala gaya. Mujhe 9 ki bajay Rs.8.50 mila aur Rs.1 ka refund le liya. Mere pass 10 ki jagah 9.50 aaya.

TDS toh de diya bank ne Govt ko us TDS ki wajah se jo apna outflow interest ka kamm huya uska benefit customer ya Govt ko thodi jaa raha hai.

 

[psmangat5]

No brother

I am puzzled! How does the bank benefit when rather than paying interest to the depositor (in the form of compounded interest) they are paying that amount instead to the Government every quarter? Yes, they don't have to pay further interest on that amount, but they don't have that money with the bank anymore to lend out either. It's like they don't have to pay interest on money that wasn't deposited with them!

The only benefit they have is having use of free money from the time of deduction from the depositor's account to the time they actually pay the money to the Government. It can be looked at this way also that that's a benefit they have at a cost to the Government who receive delayed tax.
.

No brother once the tax is transferred in TDS account banks can't use it. So they don't have free money to use. Government is most clever customer.