How I will be taxed if I invest in Fixed Deposits (FD) for 10 yrs ?

POSTED BY rajan.panchal24 ON October 21, 2013 9:25 am COMMENTS (2)

Hi,

Say if I invest in FD for 10 years. I want to understand how I will be taxed. If say 10% is my roi and 1st year I get 10000 interest on investment of one lac. So will the banks deduct tax first and then the amount will go for compounding next year or they will deduct tax only after completion of tenure that’s 10 years.

I know in debt mutual fund you will be taxed only if you withdraw units.

Thanks,
Rajan

2 replies on this article “How I will be taxed if I invest in Fixed Deposits (FD) for 10 yrs ?”

  1. ashalanshu says:
    October 21, 2013 at 2:16 pm

    Dear Rajajn, in case of bank FDs, you have the option to declare the interest and pay tax each year. Some Banks are applying TDS only when the actual payment is made whereas some are charging on yly basis. Please check with your bank, what is it’s system?

    Thanks

    Ashal

    Reply
  2. Anshuk Jain says:
    October 21, 2013 at 1:46 pm

    Banks will deduct 10% and put the rest for cumulation of next year. While you need to take care that the remaining tax is paid in your returns for that year. There is a great article by pattu which shows that due to this debt funds are better..
    http://freefincal.com/debt-mutual-fund-vs-fixed-deposit-comparator-version-ii/

    Reply

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