Tax deducted at source (TDS) is applicable to almost every instrument except a few. TDS is deducted on every kind of bank deposit, recurring, fixed and also on tax savings bank deposits. They are also applicable on a host of instruments including post office deposits. However, there is no TDS on select instruments. Here are the 7 instruments where there is no TDS.
Public Provident Fund (PPF)
Public Provident Fund not only does not attract TDS, but, is among the few instruments that also gives you benefits under Sec 80C of the Income Tax Act.
So, not only is your interest income tax free, but, also you get tax benefits of Rs 1.5 lakhs. Interest rates on the instrument is also high and safety too.
Unit Linked Insurance Plans are almost like PPF. Only they have a smaller lock-in period of 5 years, as compared to PPF of 15 years. The gains or the interest income is tax free and you get tax benefits of up to Rs 1.5 lakhs.
Dividend from shares
There is no TDS that is applicable on dividend received from shares. This is because dividend is tax free in the hands of the investors, while the company pays dividend distribution tax.
There is no TDS that is applicable on Non Convertible Debentures (NCDs) held in the electronic form.
However, the interest earned is taxable and has to be added to the total income for the payment of income tax.
The dividends received from the Equity Linked Savings Scheme (ELSS) also do not attract a tax. ELSS also qualifies for tax benefits under Sec 80C of the Income Tax Act.
National Savings Certificate (NSC)
Like Non Convertible Debentures (NCDs) there is no TDS that is applicable on the National Savings Certificate.
However, the interest income is not tax free and has to be added to total income for the purpose of tax payments.
The Kissan Vikas Patra (KVP) does not attract TDS, but the interest income is fully taxable.