ITR Filing Guide for Homemakers Earning FD Interest Income
- Rashmita Choudhary
- 5 days ago
- 11 min read
FD interest earned by homemakers is fully taxable and must be reported each year, even if the amount is small or not withdrawn. Under the Income Tax Act, interest from fixed deposits falls under “Income from Other Sources,” making accurate reporting essential. Choosing the correct ITR form, reconciling TDS through Form 26AS, and identifying applicable deductions help maintain proper tax compliance. Homemakers must also ensure PAN details, KYC information, and interest certificates are updated with the bank to avoid higher TDS. Platforms like TaxBuddy simplify this process through automated data import and guided filing support.
Table of Contents
Understanding Taxability of FD Interest for Homemakers
Fixed deposit (FD) interest earned by homemakers is treated as taxable income under the head “Income from Other Sources.” The interest is taxable in the year it accrues, not only when the deposit matures. Every bank reports interest and TDS details to the Income Tax Department, which appear in Form 26AS and AIS. Even small amounts of FD interest are taxable, and failure to report the income correctly can result in mismatch notices. Taxability applies even if the homemaker does not have any other income, making proper reporting essential.
How FD Interest Is Reported Under “Income from Other Sources”
FD interest is added to total income and disclosed in the “Income from Other Sources” schedule in the ITR. The reporting must match bank-provided statements such as interest certificates and the figures reflected in AIS/26AS. When multiple FDs exist, the annual accrued interest from each deposit must be aggregated. Savings account interest must also be added here before claiming any deduction. Banks sometimes deduct TDS on FD interest, so the homemaker should cross-check the exact figure before filing to avoid tax shortfall or duplication.
When Homemakers Must File ITR for FD Income
Filing becomes mandatory when total income—including FD interest—exceeds the basic exemption limit of ₹2.5 lakh for individuals below 60 years. Filing may also be required if TDS has been deducted, even when income is lower than the exemption limit, to claim a refund. Homemakers making investments in their own name must ensure that the source of funds is legitimate to avoid attribution of income to the spouse. Filing is also advisable when there are multiple deposits, as it maintains a clean financial record and avoids unwanted notices.
Choosing the Correct ITR Form for FD Interest
The correct ITR form depends on the sources of income. Homemakers with only FD interest, savings interest, and no capital gains or multiple properties typically use ITR-1. If the homemaker holds foreign assets, earns capital gains, or has income from more than one house property, ITR-2 becomes necessary. Selecting the correct form prevents technical rejections and ensures clear reporting of FD interest under the correct income schedule. FD interest should never be reported under salary or other incorrect categories.
ITR-1 for Homemakers With FD Interest Income
ITR-1 (Sahaj) is suitable when total income does not exceed ₹50 lakh and consists of only salary, pension, one house property, and interest income. Homemakers earning only FD interest or a combination of FD and savings interest fit this form. The “Income from Other Sources” schedule allows simple disclosure of interest earned during the financial year. Homemakers using ITR-1 must ensure that no capital gains, foreign asset disclosures, or speculative income are present in their financial profile.
When to Use ITR-2 for FD and Other Investment Income
ITR-2 must be used when FD interest is accompanied by capital gains, multiple house properties, or foreign assets. Homemakers investing in mutual funds, stocks, or property often require this form when any sale triggers taxable capital gains. ITR-2 provides detailed schedules for different investment categories, making it appropriate for those with a broader financial footprint. It also allows reporting of agricultural income above ₹5,000, exempt income, and detailed asset disclosures.
Bank Account and FD Requirements for Tax Compliance
A valid savings account linked to PAN is necessary for opening and operating FDs. The bank uses this account to credit interest periodically. Homemakers must ensure their PAN is correctly recorded to avoid being charged 20% TDS instead of 10% on FD interest. Accurate KYC is also essential for banks to report interest figures to the Income Tax Department. Maintaining a single account for FD-related transactions helps reduce reporting errors during filing season.
PAN, KYC, and Form 15G Requirements for Homemakers
When total income is below the taxable threshold, homemakers may submit Form 15G to avoid TDS deduction on FD interest. This form is valid only when the final tax liability is zero. Homemakers aged 60 or above must use Form 15H. Updated KYC and PAN records ensure the bank reports all interest income correctly under the individual's credentials. Failure to update these details may result in incorrect TDS deductions or mismatches between bank records and AIS.
TDS on FD Interest and How to Avoid Deduction Errors
Banks deduct TDS at 10% when FD interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). If PAN is not provided, TDS is deducted at 20%. To avoid unnecessary deduction, homemakers with income below taxable limits must file Form 15G/15H on time. Regularly checking 26AS and AIS ensures that TDS entries are accurate. Any excess TDS deducted is refunded after filing the ITR, making timely filing important even when income is low.
Deductions on FD and Savings Interest Income
FD interest does not qualify for deduction under Section 80TTA. However, savings interest up to ₹10,000 can be claimed under this section by individuals below 60 years. Homemakers earning only FD interest cannot apply 80TTA unless they also earn savings interest. Senior citizens receive broader benefits under Section 80TTB, allowing them to claim up to ₹50,000 on interest from both FDs and savings accounts combined.
Is FD Interest Allowed as a Deduction in the New Tax Regime?
Under the new tax regime, no deduction is available on FD interest for individuals below 60 years. Homemakers opting for the new regime must report FD interest at its full taxable value. Senior citizens also lose the benefit of Section 80TTB in this regime. Therefore, the new regime is generally less favorable for homemakers relying on interest income unless their total income is significantly lower.
How Section 80TTA Works in the Old Tax Regime
Section 80TTA allows a deduction of up to ₹10,000 on savings account interest for individuals below 60 years. This benefit applies only under the old tax regime. FD interest is not included, and the deduction must be claimed after reporting the total savings interest under “Income from Other Sources.” Homemakers earning combined interest from multiple banks can aggregate all savings interest before applying the deduction.
How Section 80TTB Benefits Senior Homemakers
Section 80TTB offers a deduction of up to ₹50,000 on interest from both savings accounts and fixed deposits for individuals aged 60 and above. This makes the old regime particularly valuable for senior homemakers with interest-based income. Any TDS deducted by the bank is first reconciled and then adjusted after applying the deduction. The benefit is not available under the new tax regime.
Reconciling FD Interest With Form 26AS and AIS
Homemakers must verify that the interest shown by banks matches the figures displayed in Form 26AS and AIS. Any mismatch can trigger automated notices from the Income Tax Department. Interest certificates from banks serve as the primary source for accurate reporting. Reviewing these documents before filing prevents errors in reporting accrued interest, especially when multiple FDs are renewed or auto-credited to savings accounts.
Step-by-Step Guide to File ITR for FD Interest Income
The filing process begins with collecting all bank interest certificates. The homemaker must then verify TDS entries in 26AS and AIS. The correct ITR form is selected based on income type. FD interest is added under “Income from Other Sources,” followed by savings interest. Deductions under 80TTA or 80TTB are applied if eligible. The tax liability is calculated, and TDS credit is adjusted. The return is submitted and verified using Aadhaar OTP, net banking, or other e-verification methods.
Using TaxBuddy to File ITR for FD Interest Income
TaxBuddy simplifies the entire process for homemakers by automatically importing AIS and 26AS data. Its AI-driven system identifies eligible deductions, flags mismatches, and ensures accurate calculation of interest income. Homemakers can choose between self-filing and expert-assisted plans, making the experience stress-free. The mobile app also provides a structured review to prevent common errors such as misreporting or missed deductions.
Common Mistakes Homemakers Must Avoid While Filing ITR
Common errors include ignoring accrued interest from ongoing FDs, reporting only matured interest, selecting the wrong ITR form, or missing TDS entries. Homemakers often forget to reconcile AIS with bank certificates, leading to mismatch notices. Omitting savings interest or incorrectly claiming deductions under the wrong section can also result in defective return notices. Ensuring accurate documentation and cross-verification is essential for seamless filing.
Conclusion
Accurately reporting FD interest allows homemakers to maintain smooth tax compliance and avoid scrutiny from the Income Tax Department. With clear understanding of the correct ITR form, deductions, TDS rules, and reconciliation steps, the process becomes straightforward. Digital tools further ease the journey, offering guided support at every stage. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides both self-filing and expert-assisted plans to suit different types of taxpayers. The self-filing plan is built on an AI-driven system that reads Form 26AS, AIS, and other income statements automatically to reduce manual work and minimise the chances of incorrect entries. It guides users through each step with smart prompts and real-time error checks, making it suitable for straightforward income categories. The expert-assisted plan is designed for individuals who prefer professional handling—TaxBuddy’s tax experts review documents, verify income entries, calculate the correct tax liability, and file the return on behalf of the user. This plan is especially useful when there are complexities such as capital gains, notices, high-value transactions, or multiple bank accounts.
Q. Which is the best site to file ITR? The most reliable place to file income tax returns is the official Income Tax Department portal. However, many taxpayers prefer platforms that simplify the process through automation and professional guidance. TaxBuddy is widely regarded as one of the best platforms for filing ITR because it imports income data directly from government systems, checks for mismatches, helps identify eligible deductions, and assists in selecting the correct ITR form. Its AI-driven workflow and expert review options make it a dependable alternative to manual filing on the government website.
Q. Where to file an income tax return? An income tax return can be filed online through the government’s e-filing portal or through platforms like TaxBuddy, which offer both guided and expert-supported filing. Filing online ensures faster processing, easier verification, and quicker refunds. TaxBuddy’s platform streamlines the process by providing automated data capture, deduction suggestions, and prompt-based assistance, reducing the effort typically required during manual filing.
Q. Is FD interest income taxable for homemakers? FD interest is fully taxable, regardless of the homemaker’s employment status. The interest earned must be reported each financial year under “Income from Other Sources,” even if the deposit has not matured. Banks report the interest to the tax department, so omitting it from the ITR may trigger mismatch notices. Once interest income and TDS entries are reconciled with Form 26AS and AIS, the homemaker must declare the amount in the appropriate ITR form to complete filing accurately.
Q. Which ITR form should homemakers choose for FD interest income? The correct ITR form depends on the total income and the type of income sources. ITR-1 is suitable when income is limited to salary/pension, interest income, and one house property, and the total income remains below ₹50 lakh. Homemakers with only FD and savings interest generally fall under this category. When additional income such as capital gains, foreign assets, multiple properties, or exempt incomes are involved, ITR-2 becomes mandatory. Using the correct form prevents validation errors and avoids defective return notices.
Q. Can homemakers avoid TDS on FD interest? Homemakers with total income below the taxable limit can avoid TDS by submitting Form 15G (below 60 years) or Form 15H (60+ years) to their bank at the beginning of the financial year. These declarations inform the bank that no tax should be deducted because the final tax liability is expected to be zero. If TDS is deducted despite eligibility, the homemaker can claim the refund while filing ITR. Ensuring that PAN and KYC details are updated is essential to avoid higher TDS at 20%.
Q. What deductions are available on FD interest income? No deductions are available on FD interest for individuals below 60 years under Section 80TTA. This section provides relief only for savings account interest. Senior citizens, however, get broader benefits under Section 80TTB, which allows a deduction of up to ₹50,000 on total interest from both savings accounts and FDs. This advantage is available only under the old tax regime. Under the new regime, these deductions cannot be claimed.
Q. Is FD interest allowed as a deduction in the new tax regime? The new tax regime does not permit deductions under Sections 80TTA or 80TTB, which means FD interest is fully taxable without any relief. Individuals choosing the new regime must report FD interest at its gross amount and pay tax based on the slab rates applicable. Because homemakers often rely solely on interest income, the old regime may provide better tax benefits where deductions like 80TTB (for seniors) are available.
Q. How to check whether TDS on FD interest is correctly deducted? TDS details can be verified through Form 26AS and the AIS on the Income Tax portal. These documents reflect the exact amount of TDS the bank has deposited against the homemaker’s PAN. Interest certificates issued by the bank also show the breakup of interest and TDS. Matching these figures ensures that the correct tax credit is claimed. Any mismatch must be addressed before filing to avoid shortfall notices or delayed refunds.
Q. What happens if FD interest is not reported in the ITR? Non-reporting of FD interest may lead to automated notices from the Income Tax Department because all banks share financial information directly with the government. AIS and 26AS reflect the interest earned and TDS deducted, so a mismatch triggers a discrepancy alert under Section 143(1)(a). Failure to correct the return may result in demand notices or penalties. Proper reporting avoids compliance issues and ensures a smooth filing experience.
Q. Can a homemaker file ITR even if the income is below the taxable limit? Yes. A homemaker may file ITR voluntarily even when income is below the basic exemption limit. Filing is beneficial when TDS has been deducted, when refund claims are required, or when there is a need to maintain a clean financial record for future loans, visas, or credit assessments. Reporting FD interest ensures that government records remain consistent with AIS and avoids questions related to unexplained deposits or investments later.
Q. How can TaxBuddy assist homemakers with FD interest in filing ITR? TaxBuddy simplifies filing for homemakers by automatically reading interest entries from AIS and 26AS, ensuring nothing is missed. The platform identifies the correct ITR form, checks for TDS mismatches, calculates deductions applicable under the old regime, and provides clear tax liability computation. Homemakers can opt for guided self-filing or choose expert-assisted filing where a tax professional verifies every detail, prepares the return, and resolves any filing concerns. This makes the process accurate, stress-free, and efficient.
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