September 15, 2025, last date for submitting the Income Tax Returns (ITRs) for the Assessment Year 2025-26. As individuals gather their documents and claim deductions, understanding the intricacies of tax deducted at source (TDS) on fixed deposits (FDs) becomes crucial.
Banks or financial institutions deduct TDS on fixed deposits when the interest earned exceeds certain thresholds.
Here's what you need to know:
TDS thresholds
Individuals below 60 years: TDS is deducted if interest exceeds Rs 40,000 per financial year. However, for the financial year 2025-26, the threshold limit has been revised to Rs 50,000.
Senior citizens: They can claim a deduction of up to Rs 50,000 on interest income earned from deposits with banks, post offices, or cooperative societies under Section 80TTB. This includes interest from savings accounts, fixed deposits, and recurring deposits.
TDS rates
10%: Applies when a permanent account number (PAN) is provided and interest exceeds the threshold limit.
20%: Applies when PAN is not provided.
Also read | Last minute rush: Steer clear of these common ITR filing errors to avoid I-T queries, notices later
Claiming TDS refund
If your total income falls below the taxable limit, you're eligible to claim a TDS refund when filing your ITR. The process involves filing your ITR, where you declare your total income, including the interest earned from fixed deposits. After assessing your tax liability, the tax authorities will refund the excess TDS deducted, ensuring you receive the amount you've overpaid.
Avoiding TDS deduction
To avoid TDS deduction, submit:
- Form 15G: For individuals below 60 years with total income below the taxable limit.
- Form 15H: For senior citizens with total income below the taxable limit.
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