Now you will get more interest by making Fixed Deposit (FD) in Axis Bank. Actually, the bank has increased the interest on FDs of less than Rs 2 crore. Now on getting FD in Axis Bank, you will get interest ranging from 3.50 to 7.26%. According to the official website of Axis Bank, the new interest rates on FD will be applicable from February 11.

Axis Bank has made this announcement after increasing the repo rate of RBI. RBI has increased the repo rate by 25 basis points on Wednesday (February 8). With this, now the repo rate has increased from 6.25% to 6.5%.

According to the new interest rates, if you now make FD in Axis Bank for 1 year, then you will get interest at the rate of 6.75% per annum. The bank will give the highest interest of 7.26% on FD of 2 years. Apart from this, 7-7% interest will be available on FD of 3 and 5 years.

Tax is also to be paid on the interest earned from FD

The interest earned from FD is fully taxable. Whatever interest you earn on FD in a year, it gets added to your annual income. Based on the total income, your tax slab is determined. Since the interest income earned on FD is considered as "Income from other sources", it is charged under Tax Deducted at Source or TDS. When your bank credits your interest income to your account, TDS is deducted at the same time.

Let us know some points related to tax on FD

Banks do not deduct TDS on Fixed Deposits if your total income is less than Rs 2.5 lakh in a year. 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.

TDS is not deducted if your interest income from all FDs is less than Rs 40,000 in a year. On the other hand, if your interest income is more than Rs 40,000, then 10% TDS will be deducted. Bank can deduct 20% for not giving PAN card.

This limit for deducting TDS on interest income above Rs 40,000 is for people below 60 years of age. On the other hand, the income of senior citizens above 60 years of age up to Rs 50,000 from FD is tax free. 10% TDS is deducted if the income is more than this.

If the bank has deducted TDS on your FD interest income and your total income is not subject to income tax, then you can claim the deducted TDS while filing tax. This will be credited to your account.