Tax deducted at source (TDS) means the tax that is deducted from any of your income. Many taxpayers 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 (limit limit). TDS depends on which category the taxpayer falls in. Apart from this, TDS is different on different types of income. For example, if the dividend of a stock company i.e. your share in the profits is more than Rs 5,000, the department will deduct TDS on it.
Save TDS by having more than one FD in different banks
At the same time, if you earn money from a bank’s savings account, FD or any other scheme, you will still have to pay tax. However it has a limit. For common citizens this limit is Rs 40 thousand, while for senior citizens it is Rs 50 thousand. If your income from these sources exceeds this given limit, your income becomes taxable.
However, this rule applies to interest earned from the bank in a financial year. That means, if you make FD in different banks then you can get exemption in TDS. But for this it has to be kept in mind that the income from FD in every bank should be less than Rs 40 thousand.
Even if the income on FD is more than Rs 40 thousand, TDS will not be deducted.
If your income from FD is more than Rs 40 thousand, but your income in the same financial year is less than Rs 2.5 lakh, 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, the amount deducted is TDS. The government collects taxes through this. It is deducted on a variety of income sources. Like salary, interest received on any investment or commission etc. Any paying entity (which comes under the purview of TDS) deducts a certain amount as TDS.