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Fixed Deposit Interest Rate: State Bank of India (SBI), the country's largest public sector bank, has increased the interest rates on fixed deposits (FD). SBI has increased the interest rate on FDs of 46 days to 179 days from 4.75% to 5.50%. Whereas on FDs of 180 days to 210 days, interest will now be 6.00 percent instead of 5.75 percent.

Similarly, FD with maturity period of 211 days to less than 1 year will now get 6.25% interest instead of 6.00%. There has been no change in the interest rates for the remaining period. These interest rates have come into effect from May 15. These interest rates are for FDs of less than Rs 2 crore.

Tax on interest received from FD also (Fixed Deposit Interest Rate)

The interest received from FD is fully taxable. Whatever interest you earn on FD in a year is added to your annual income. Your tax slab is determined on the basis of total income.

Since the interest income earned on FD is considered “income from other sources”, it is subject to tax deducted at source or TDS. When your bank deposits your interest income into your account, TDS is deducted at the same time.

Some things related to tax on FD

If your total income is less than Rs 2.5 lakh in a year then the bank does not deduct TDS on fixed deposits. However, for this you will have to submit Form 15G or 15H. In such a situation, if you want to save TDS then definitely submit Form 15G or 15H.

If your interest income from all FDs is less than Rs 40,000 in a year, TDS is not deducted. Whereas if your interest income is more than Rs 40,000 then 10 percent TDS will be deducted. The bank can deduct 20 percent for not providing PAN card.

This limit for deducting TDS on interest income above Rs 40,000 is for people below 60 years of age. At the same time, income from FD of senior citizens above 60 years of age up to Rs 50 thousand is tax free. If the income is more than this, 10 percent TDS is deducted. If the bank has deducted TDS on your FD interest income and your total income is not subject to income tax, you can claim the TDS deducted while filing taxes. This will be credited to your account.