Union Bank Raises FD Interest Rates: Now Offers Annual Returns of Up to 8%

Union Bank of India has revised its fixed deposit (FD) interest rates. Following this change, regular citizens can now earn annual interest rates ranging from 3.50% to 7.25% on their FDs.

Meanwhile, senior citizens are offered interest rates ranging from 4% to 7.75%, while super senior citizens can earn interest rates of 4.25% to 8%. These revised rates apply to FDs of less than ₹2 crores.

The bank has also launched a fixed deposit scheme for 666 days. In this scheme, super senior citizens (aged 80 years or above) will receive an annual interest rate of 7.95%, senior citizens (aged 60 years or above) will receive 7.80%, and others will receive 7.30%. These new interest rates came into effect on June 1.

It’s important to note that interest earned from FDs is fully taxable. The interest income earned in a year is added to your annual income, and your tax slab is determined accordingly. Since interest income from FDs is considered “income from other sources,” it is subject to tax deducted at source (TDS). When your bank credits the interest income to your account, TDS is deducted at that time.

Let’s look at some points related to tax on FD interest:

1. If your total income is less than ₹2.5 lakhs in a year, TDS is not deducted on bank fixed deposits. However, you will need to submit Form 15G or 15H for this exemption.
2. If the interest income from all your FDs is less than ₹40,000 in a year, TDS is not deducted. However, if your interest income exceeds ₹40,000, TDS at the rate of 10% is deducted. Banks may deduct 20% TDS for non-submission of PAN card.
3. The limit for deducting TDS on interest income exceeding ₹40,000 applies to individuals below the age of 60. For individuals aged 60 and above, i.e., senior citizens, interest income up to ₹50,000 from FDs is tax-free. TDS is deducted at a rate of 10% on income exceeding this limit.
4. If the bank has deducted TDS on your FD interest income and your total income falls below the taxable limit, you can claim the deducted TDS while filing your tax return. This will be credited to your account.