Fixed Deposit In Wife's Name: A Surprisingly Effective Tax Saving Strategy, Here's How

One can save money on income taxes if their wife is a homemaker. Even while a lot of people participate in different plans to lower their tax liability, this is frequently insufficient. In addition to offering assured profits, opening a fixed deposit (FD) account in the name of one's wife can also help reduce taxes.

Fixed deposit investments have long been a well-liked option. The return is assured, and it is safe. Nonetheless, there are two clear benefits to creating an FD account in one's wife's name: income tax savings and a consistent interest income stream.

TDS (Tax Deducted at Source) is applicable under income tax regulations if the interest earned on an FD exceeds Rs 80,000. However, TDS will not be subtracted from a wife's FD if she is a homemaker with no other sources of income. One can open an FD account in their wife's name and submit Form 15G to take advantage of this.

A joint FD account with one's wife is an additional option. On the other hand, one must make sure that their wife is listed as the primary holder. To benefit from tax exemptions and avoid TDS deduction, this step is essential.

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What Is Form 15G?

Form 15G is intended especially for people under 60 whose yearly income is less than the taxable limit. Sections 197A (1) and 1 (A) of the Income Tax Act govern this self-declaration form, which enables one to notify the bank that their income is exempt from taxation. TDS on the FD will no longer be deducted by the bank after filing.

One should complete Form 15H if they are 60 years of age or older. Senior citizens can stop TDS deductions on their FDs by using this form. However, only people with no taxable income are eligible for this facility.