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TDS on your fixed deposit interest? Here’s how to get a refund if your income is below the tax limit
You can claim a refund on tax deducted from fixed deposit interest by filing your ITR—here’s the process explained.
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What is TDS on FD interest
Banks are required to deduct Tax Deducted at Source (TDS) of 10% of the interest on your fixed deposits if the total interest you earn from them in a year is more than ₹40,000 (₹50,000 for senior citizen). This rule applies even if your overall income is below the basic tax exemption limit. If you have no tax payable, you may stop TDS deduction or refund by submitting return of income.
Banks are required to deduct Tax Deducted at Source (TDS) of 10% of the interest on your fixed deposits if the total interest you earn from them in a year is more than ₹40,000 (₹50,000 for senior citizen). This rule applies even if your overall income is below the basic tax exemption limit. If you have no tax payable, you may stop TDS deduction or refund by submitting return of income.
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How to know whether you will be able to claim refund
You are able to claim refund when TDS deducted is more than your net tax liability. If you earn interest on fixed deposits only and your net income is below ₹2.5 lakh (₹3 lakh if you are a senior citizen), you fall under the tax exemption slab. Then your entire TDS deducted on FD interest is refundable if you file your ITR.
You are able to claim refund when TDS deducted is more than your net tax liability. If you earn interest on fixed deposits only and your net income is below ₹2.5 lakh (₹3 lakh if you are a senior citizen), you fall under the tax exemption slab. Then your entire TDS deducted on FD interest is refundable if you file your ITR.
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Recovery of TDS under Form 15G/15H
In order not to deduct any TDS, you can submit Form 15G (in your case if you are not above 60 years old) or Form 15H (in your case if you are senior citizen) at the start of the financial year. These self-declaration forms certify that your income level falls below the tax threshold and you do not have any taxable income. Paying them to your bank can keep you from even missing the TDS on your fixed deposit interest in the first place.
In order not to deduct any TDS, you can submit Form 15G (in your case if you are not above 60 years old) or Form 15H (in your case if you are senior citizen) at the start of the financial year. These self-declaration forms certify that your income level falls below the tax threshold and you do not have any taxable income. Paying them to your bank can keep you from even missing the TDS on your fixed deposit interest in the first place.
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Steps to claim refund of TDS through ITR
When there is pre-deduction of TDS, you will be able to claim the refund at the time of filing your Income Tax Return (ITR) of the concerned assessment year. Declaring the interest income in "Income from Other Sources" and the TDS information in the "Tax Details" column. The tax will be reconciled automatically from your Form 26AS, and the tax deducted in excess will be refunded by the Income Tax Department.
When there is pre-deduction of TDS, you will be able to claim the refund at the time of filing your Income Tax Return (ITR) of the concerned assessment year. Declaring the interest income in "Income from Other Sources" and the TDS information in the "Tax Details" column. The tax will be reconciled automatically from your Form 26AS, and the tax deducted in excess will be refunded by the Income Tax Department.
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Track refund status upon e-filing
Once your ITR gets accepted and processed, the refund (if any) is credited in 20–45 days in normal conditions. In order to view the refund status, visit the income tax e-filing portal or NSDL website using your PAN and assessment year. Pre-validate your bank account in the e-filing portal to get the refund immediately. Early filing and accurate information result in a faster TDS refund processing.
Once your ITR gets accepted and processed, the refund (if any) is credited in 20–45 days in normal conditions. In order to view the refund status, visit the income tax e-filing portal or NSDL website using your PAN and assessment year. Pre-validate your bank account in the e-filing portal to get the refund immediately. Early filing and accurate information result in a faster TDS refund processing.
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