Reporting Income from Multiple Fixed Deposit Accounts in ITR
- Dipali Waghmode
- 2 days ago
- 8 min read
Reporting interest from multiple fixed deposit accounts requires a clear, consolidated approach so the Income Tax Return reflects accurate income and tax deductions. Every rupee of interest from all banks—whether credited quarterly, annually, or on maturity—must be combined and shown under the correct income head. Mismatches between bank data, AIS, and Form 26AS often trigger tax notices, making proper reporting essential. Correct disclosure ensures smooth processing, prevents penalty exposure, and helps claim eligible TDS credits. With increasing digital visibility of financial transactions, consistent and precise reporting of FD interest is now non-negotiable for compliant tax filing.
Table of Contents
Understanding FD Interest for ITR Filing
Interest earned on fixed deposits is fully taxable under Income from Other Sources, regardless of the number of FDs or the bank where they are held. Taxation is based on the total interest accrued or received during the financial year, depending on how the bank computes interest. Banks usually follow an accrual-based method, meaning interest is taxable even if paid at maturity. Since FDs are high-visibility instruments in AIS, accurate reporting becomes essential to avoid scrutiny.
Why Consolidation of Multiple FD Accounts Is Important
Individuals often hold fixed deposits across several banks, which leads to multiple interest entries in AIS. For ITR filing, these cannot be reported separately in scattered form. The total interest from every FD must be aggregated into one consolidated figure. Consolidation ensures accurate tax calculation, prevents mismatch notices, and allows seamless TDS credit utilisation. This approach also avoids duplicate reporting that may inflate taxable income.
How to Report Interest Income from Multiple FDs in ITR
Start by collecting annual interest certificates from every bank and summarise the total interest earned across all FDs. Cross-verify these figures with AIS and Form 26AS. Once verified, enter the total consolidated interest under Income from Other Sources in the ITR. If TDS is deducted by multiple banks, report the cumulative TDS in the relevant schedule. The final computation must reflect a single combined interest income to ensure proper tax assessment.
Reporting FD Interest under Income from Other Sources
The ITR has a specific section where taxable interest income must be disclosed. Enter the aggregated interest amount here. This helps the income tax system match your reported figures with AIS entries. Even if banks follow different compounding or payout frequencies, the consolidated amount should represent your total taxable FD interest for the year. Clear disclosure ensures your return aligns with departmental records.
Choosing the Correct ITR Form for FD Interest Reporting
Taxpayers with only salary income and FD interest often use ITR-1. Those with presumptive business income may use ITR-4. However, if income includes capital gains, multiple residential properties, or foreign assets, ITR-2 becomes the correct choice. Selecting the wrong form may lead to rejection or defective return notices. Understanding the form’s eligibility criteria ensures accurate and valid filing.
Bank Account Details Required for FD Interest Disclosure
The ITR requires full disclosure of operational bank accounts, including account number and IFSC code. These details help the department reconcile interest entries and verify TDS credits. If FDs are held across multiple banks, each linked savings account must be correctly mentioned. This ensures that refund processing and tax reconciliation are smooth and accurate.
TDS on Fixed Deposit Interest and Form 15G/15H
Banks deduct TDS when annual interest exceeds ₹5,000 (bank policies may vary). If income is below the taxable limit, taxpayers can submit Form 15G or 15H to prevent unnecessary TDS. However, interest income must be reported in the ITR even when no TDS is deducted. Submitting these forms does not exempt reporting obligations; it merely avoids tax deduction at source. Any TDS deducted incorrectly can be claimed while filing the return.
How to Reconcile FD Interest with Form 26AS and AIS
Reconciliation is essential to avoid mismatches. Compare interest certificates from banks with AIS entries. Differences may arise due to accrual versus credit mismatch, multiple FD renewals, or timing differences. Once verified, update the interest figure accordingly. Use Form 26AS to confirm TDS deductions and ensure every deduction is reflected correctly. Platforms like TaxBuddy automatically reconcile these entries to minimise human error.
Common Errors While Reporting Multiple FD Accounts
Taxpayers often report interest only from the account where TDS is deducted, ignoring entries where no TDS was applied. Others incorrectly report only the maturity interest or skip accrued interest during the year. Inconsistent figures between AIS, interest certificates, and declared income frequently trigger notices. Another common mistake is reporting interest under the wrong income head. These errors are avoidable with proper consolidation.
Impact of Non-Disclosure or Incorrect FD Reporting
Inaccurate reporting may lead to adjustment notices under Section 143(1), mismatch communications from CPC, or scrutiny notices. Underreporting is treated as misreporting, which can attract penalties. If TDS is not reconciled correctly, refund delays or denial may occur. Proper reporting helps maintain transparency and avoids unnecessary tax complications.
How TaxBuddy Helps with FD Interest Reporting and TDS Matching
TaxBuddy automates the consolidation of interest from multiple banks, matches entries with AIS and Form 26AS, and highlights mismatches instantly. Its AI-driven tax engine detects missing or duplicated entries, calculates tax liability, and ensures correct disclosure under the appropriate income head. This reduces filing errors, helps maximise TDS credits, and ensures a smooth, compliant ITR filing experience.
Conclusion
Accurate reporting of FD interest ensures clean compliance and prevents mismatch notices. Consolidating interest across all banks, verifying TDS, selecting the correct ITR form, and reconciling AIS data are essential steps for smooth tax filing. Digital tools and expert assistance make the process easier. 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
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides two distinct filing options to suit different taxpayer profiles. The self-filing plan is designed for individuals with straightforward income sources and offers an AI-powered interface that auto-reads Form 16, AIS, and bank data to minimise errors. For those with complex financial situations—such as multiple FDs, capital gains, rental income, or business income—the expert-assisted plan connects users with qualified tax professionals. These experts review every detail, identify gaps or mismatches, apply the correct tax rules, and file the return on the user’s behalf. This dual structure gives flexibility for both simple and complex ITR requirements.
Q2. Which is the best site to file ITR? The Income Tax Department’s official portal is the primary and authorised platform for filing ITRs in India. However, it may feel technical for many taxpayers who prefer a guided and error-proof experience. Platforms like TaxBuddy provide automated data extraction, intelligent error detection, and access to tax experts. These features create a smooth workflow, especially for individuals dealing with multiple FDs, TDS mismatches, or layered income structures. The best choice depends on comfort level—those seeking simplicity often prefer TaxBuddy’s automated and expert-backed support system.
Q3. Where to file an income tax return? An income tax return can be filed directly on the official portal of the Income Tax Department or through authorised third-party platforms. While the government portal is mandatory for final submission, private platforms offer a layer of convenience with tools like automatic data reading, interest consolidation, and real-time validation. TaxBuddy, for instance, provides an end-to-end experience—from preparing the return to submission—while ensuring compliance with income tax rules. Both options are valid; the preference depends on how much assistance is needed during the filing process.
Q4. Is interest from multiple FDs taxable? Yes, interest earned from all fixed deposits—irrespective of the number of accounts or banks—is fully taxable. The Income Tax Act classifies FD interest under Income from Other Sources, and the total interest must be aggregated for accurate reporting. Even if interest is reinvested or compounded, it remains taxable in the year of accrual. Multiple FD accounts often lead to numerous small entries in AIS, making consolidation essential for correct tax computation and avoiding mismatch notices.
Q5. Should FD interest be reported if TDS was not deducted? Yes, FD interest must be disclosed in the ITR even when no TDS has been deducted. Banks deduct TDS only when the interest exceeds specified limits or when Form 15G/15H is not submitted. However, the taxability of interest does not depend on TDS. Failure to report such income may result in adjustments under Section 143(1), interest on underreporting, or notices from the tax department, since AIS captures interest entries across all banks.
Q6. How to calculate total FD interest when multiple accounts exist? To compute the total interest, collect interest certificates or annual statements from every bank. Compare these with AIS entries to ensure consistency, since some banks follow accrual-based reporting and others report on payout. Once verified, add the interest amounts from all accounts to form a consolidated figure. This single combined value must then be reported in the ITR. TaxBuddy’s platform simplifies this by automatically aggregating interest data from multiple banks and highlighting mismatches.
Q7. Which ITR form is suitable for FD interest income? The right ITR form depends on the complete income profile. ITR-1 can be used by salaried individuals who have FD interest as an additional income source. ITR-4 is suitable for eligible taxpayers opting for presumptive taxation. If the income includes capital gains, multiple house properties, or foreign assets, then ITR-2 becomes the correct choice. Matching the form with the income structure ensures smoother processing and avoids defective return notices.
Q8. Is Form 15G/15H enough to avoid paying tax on FD interest? Form 15G (for individuals below 60) and Form 15H (for senior citizens) are declarations submitted to banks to prevent TDS deduction. They do not exempt the taxpayer from paying tax on FD interest. These forms are valid only when the total tax liability is expected to be zero. Even when TDS is avoided, the interest must still be disclosed in the ITR. Any failure in reporting can be flagged by AIS since banks continue to report the interest amount.
Q9. How to handle incorrect TDS deduction by banks? If a bank has deducted excess or incorrect TDS, verify the figure with Form 26AS and the bank-issued interest certificate. The TDS recorded in 26AS will be considered for tax credit. If excess TDS has been deducted, the difference can be claimed as a refund while filing the ITR. If the bank has underreported the TDS, the taxpayer may request a correction from the bank so that updated figures appear in 26AS. Timely correction helps prevent mismatches during ITR processing.
Q10. What if AIS shows higher interest than actual? AIS may reflect higher amounts due to accrual-based reporting, FD renewals, or provisional entries. The taxpayer should compare AIS figures with actual interest certificates and bank statements. If AIS entries are inaccurate, the return must be filed using the correct amount, accompanied by proper documentation. The Income Tax Department allows taxpayers to provide feedback on AIS entries to correct or update them. Maintaining supporting records ensures transparency in case of future queries.
Q11. Can FD interest be offset by deductions? FD interest is fully taxable, but overall taxable income may be reduced through eligible deductions under Chapter VI-A, such as Section 80C, 80D, or 80CCD(1B). These deductions do not apply directly to FD interest but indirectly reduce total income. Certain senior citizens may also benefit from Section 80TTB, which allows a deduction on interest from deposits, including FDs, up to a specified limit. Eligibility must always be checked before applying any deduction.
Q12. Does TaxBuddy help with TDS reconciliation for multiple FDs? Yes. TaxBuddy’s automated system reads interest entries from AIS, bank statements, and Form 26AS to detect inconsistencies in TDS reporting. It consolidates all FD interest, identifies missing or duplicated entries, and ensures that the final reported figure matches departmental records. This reduces errors, prevents mismatch notices, and ensure the taxpayer receives the full benefit of all TDS deductions. The expert-assisted plan further includes manual verification by tax professionals for added accuracy.
