How to Report FD Interest from Multiple Banks Under Section 194A
- Asharam Swain
- Aug 1
- 9 min read
Interest earned from Fixed Deposits (FDs) is one of the most common sources of income for many individuals. However, the interest on FDs is subject to Tax Deducted at Source (TDS), as per Section 194A of the Income Tax Act. This means that banks and financial institutions deduct tax on the interest paid to FD holders if it exceeds a certain limit. The TDS deducted is then adjusted against the total tax liability of the individual when filing the Income Tax Return (ITR). Let us explore the process of reporting FD interest in your ITR, understanding TDS on FD interest, and ensuring that you claim any refunds due to excess TDS deductions.
Table of Contents
Understanding Section 194A: TDS on FD Interest
Section 194A of the Income Tax Act deals with TDS on interest paid by banks and financial institutions on fixed deposits. If the interest income exceeds ₹40,000 (₹50,000 for senior citizens), the bank or financial institution is required to deduct tax at source before crediting the interest to your FD account. The TDS rate is generally 10%, but it can vary depending on factors such as your PAN status, and whether you have provided the bank with a valid PAN card.
For individuals who do not furnish their PAN to the bank, TDS is deducted at a higher rate of 20%. The TDS amount is deducted annually at the time of interest credit and can be verified in Form 26AS, a consolidated tax statement that reflects all tax-related information, including TDS.
Step 1: Collect TDS Certificates and Interest Statements
The first step in correctly reporting your FD interest income and the TDS deducted is collecting all the necessary documents. This includes:
TDS Certificates (Form 16A): Form 16A is issued by the bank or financial institution detailing the interest earned and the TDS deducted. This certificate is crucial for verifying the TDS deduction made on your FD interest.
Interest Statement: Banks also provide an interest statement, which outlines the total interest earned during the financial year. This is usually sent at the end of the year or available online via the bank’s website. It is important to ensure that the interest amount mentioned in the statement matches the total interest reported in Form 26AS.
By collecting these documents, you ensure that you have accurate information to report the FD interest income and the corresponding TDS in your ITR.
Step 2: Consolidate Total Interest Income from Multiple Banks
If you have FDs with multiple banks or financial institutions, you must consolidate the total interest income from all these sources. Each bank will deduct TDS separately, and the total interest income from all FDs will contribute to your taxable income.
You should ensure that you add the interest earned from all your FDs together, as this will form part of your total income while filing the ITR. This consolidated figure will help you determine the correct amount to report in your return.
Step 3: Match TDS Details with Form 26AS
Once you have consolidated your FD interest income, you need to check the TDS deductions against Form 26AS. Form 26AS is an essential document that records all TDS payments made against your PAN.
You should log into the Income Tax Department’s portal and download the latest version of Form 26AS, which will include details of all TDS deducted by banks, including TDS on FD interest. Verify that the amount of TDS deducted by your bank matches the TDS reported in Form 26AS. Any discrepancy should be clarified with the bank to avoid complications in your ITR filing.
Step 4: Correct Disclosure of FD Interest in ITR
Once you have confirmed the total interest income and TDS details, the next step is to disclose them correctly in your Income Tax Return (ITR).
Income from Other Sources: FD interest is categorized under “Income from Other Sources” in the ITR form. When filling out the ITR, ensure that you enter the total interest income from all your FDs in the appropriate section.
TDS on FD Interest: In the section where you report tax deducted at source (TDS), ensure that you enter the total TDS deducted by the bank. This amount will be used to offset your total tax liability.
By reporting the correct income and TDS amount, you ensure that the tax authorities can match your filing with the details available in their records, preventing any errors or discrepancies.
Step 5: Claim Refund (if applicable)
If the TDS deducted is higher than your actual tax liability, you are eligible for a refund of the excess amount. When filing your ITR, you should check the “Refund” section to indicate that you are entitled to a refund. The refund amount will be calculated by the Income Tax Department based on the total tax paid, including the TDS deducted on FD interest.
Once your ITR is processed, the refund will be credited to your bank account if applicable. The processing time for refunds can vary, but it generally takes a few weeks after filing the return.
Additional Best Practices for Reporting FD Interest
Keep Track of Your FD Interest: Ensure that you track all the interest income earned from FDs throughout the year. This helps in maintaining accurate records and ensures that no interest is missed while filing.
Review Bank Statements Regularly: Banks often update their interest rates or make corrections to the reported interest amounts. It’s important to keep an eye on any changes to ensure that your reported income matches the actual interest received.
Check TDS for Senior Citizens: Senior citizens are eligible for a higher TDS threshold (₹50,000). If you are a senior citizen, ensure that you provide your PAN and necessary documents to your bank to avail of this benefit.
Common Scenarios and How to Handle Them
Mismatch in TDS Amount: If the TDS deducted by the bank does not match the amount in Form 26AS, reach out to the bank to rectify the issue. You may need to submit a corrected TDS certificate.
Interest Income Below ₹40,000: If your total FD interest income is below ₹40,000 (₹50,000 for senior citizens), TDS may not have been deducted. In this case, you are still required to report the income, but no TDS will be applicable.
Multiple FDs with Different Banks: If you have multiple FDs across different banks, ensure that the total interest income and TDS amounts are correctly consolidated and reported. Ensure that no income is left unreported.
Conclusion
Reporting FD interest accurately in your ITR is essential to avoid issues with the Income Tax Department. By following these steps, including consolidating your interest income, matching TDS with Form 26AS, and claiming a refund if applicable, you ensure that your tax filing is correct and complete. For further assistance, consider using platforms likeTaxBuddy mobile app, which simplify the filing process and help ensure accurate tax reporting.
Frequently Asked Question (FAQs)
Q1: Do I need to report FD interest if no TDS was deducted?
Yes, even if no TDS was deducted on your Fixed Deposit (FD) interest, you are still required to report the income in your Income Tax Return (ITR). The interest earned from FDs is considered taxable income under the "Income from Other Sources" section. If your total interest income exceeds the basic exemption limit (₹2.5 lakh for individuals below 60 years), you must declare it. TDS deduction does not impact the requirement to report income, and failing to do so could lead to penalties if the income is not disclosed to the tax authorities.
Q2: How do I get a corrected TDS certificate?
If you notice discrepancies in your TDS certificate, such as incorrect TDS amounts or errors in the details like your PAN number, you should immediately contact the bank or financial institution that issued the TDS certificate. Request them to issue a corrected certificate. Once corrected, the revised TDS certificate will reflect the accurate TDS amount that should be reflected in your Form 26AS. This corrected certificate ensures that the TDS figures are properly considered when filing your ITR and that any excess or shortfall in TDS deduction can be adjusted.
Q3: Can I claim a refund of excess TDS?
Yes, if the TDS deducted on your FD interest is higher than your actual tax liability, you can claim a refund. To do so, file your ITR and ensure that the TDS deducted is properly reflected in your return. When filing your ITR, the amount of TDS deducted will be automatically adjusted against your total tax liability. If the TDS exceeds the tax payable, the Income Tax Department will process a refund. The refund will be credited to the bank account mentioned in your ITR once the processing is complete.
Q4: What if my TDS certificate shows the wrong PAN?
If your PAN is incorrectly mentioned on the TDS certificate, it could lead to discrepancies in your Form 26AS, causing issues with your tax filings. In such cases, you should contact the bank or financial institution that issued the TDS certificate and request them to correct the PAN details. After the correction, a revised TDS certificate will be issued, reflecting the accurate PAN. This will ensure that your TDS is correctly reflected in your Form 26AS and that it is properly accounted for when filing your ITR.
Q5: Is TDS deducted on FD interest every year?
Yes, TDS is typically deducted annually on the interest earned from Fixed Deposits if the total interest income from the FD exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). However, TDS is not deducted if your interest income is below these thresholds. In cases where TDS is deducted, it will be reflected in your Form 26AS, and you should ensure that it is accurately reported when filing your ITR. If TDS is not deducted, you must still report the interest income in your tax return.
Q6: What should I do if I receive multiple TDS certificates for one FD?
If you receive multiple TDS certificates for the same FD from different banks or branches, it’s essential to consolidate the total TDS deducted across all certificates. The combined TDS amount should be reported in your ITR. When filing your return, ensure that the total TDS from all sources is included under the appropriate section, such as “Income from Other Sources” and “TDS on Income Other Than Salary.” Properly consolidating the amounts will help you avoid discrepancies and ensure that your tax return reflects the correct TDS figures.
Q7: Can I claim a refund of TDS deducted on interest if my total tax liability is lower?
Yes, you can claim a refund of any excess TDS deducted on FD interest if your total tax liability is lower than the TDS amount. The refund is claimed when you file your ITR, and the excess TDS amount is set off against your final tax liability. If the TDS exceeds your tax liability, the Income Tax Department will process the refund and credit the excess amount to your bank account after completing the verification process.
Q8: What happens if the bank deducts TDS but I do not report the FD interest in my ITR?
If the bank deducts TDS but you fail to report the FD interest income in your ITR, the mismatch between the TDS reported in Form 26AS and the income declared in your return can lead to a notice from the Income Tax Department. It's crucial to ensure that all TDS amounts reflected in your Form 26AS are properly included in your ITR. Failure to report interest income can lead to penalties, interest charges on the unpaid tax, and delays in processing your refund.
Q9: How do I check if my TDS has been deducted correctly?
To verify if your TDS has been correctly deducted, you can check your Form 26AS, which is available on the official Income Tax Department’s e-filing portal. This form shows all the TDS deducted by banks, employers, or any other entities. If there is a discrepancy between the TDS amount shown in your Form 26AS and what has been deducted, contact the concerned institution to get it rectified. It's important to verify TDS details regularly to ensure accuracy before filing your ITR.
Q10: What if my TDS is not reflected in Form 26AS?
If your TDS is not reflected in Form 26AS, you should first check with the entity that deducted the TDS (such as the bank or employer) to confirm whether the TDS payment was deposited correctly with the Income Tax Department. If the TDS payment has not been properly deposited or the details are incorrect, request the concerned entity to rectify it. Once corrected, the updated TDS details will appear in your Form 26AS. You should ensure that TDS is properly reflected before filing your ITR to avoid discrepancies and penalties.
Q11: Can I avoid TDS deduction by submitting a Form 15G/15H?
Yes, if your total interest income is below the taxable threshold (₹2.5 lakh for individuals below 60 years and ₹3 lakh for senior citizens), you can submit Form 15G or 15H to the bank. These forms are declarations stating that your total income is below the taxable limit, and as a result, no TDS will be deducted. Form 15H is applicable for senior citizens, while Form 15G is for those under 60 years. However, if your interest income exceeds the exemption limit, TDS will still be deducted.
Q12: Can I claim TDS deducted on FD interest if I am not in the taxable bracket?
Yes, if TDS has been deducted on your FD interest but you are not in the taxable bracket (i.e., your total income is below the taxable limit), you can claim a refund of the TDS by filing your ITR. The TDS amount will be adjusted against your final tax liability, and if no tax is due, the excess amount will be refunded to you. You must ensure that the TDS is correctly reported in your ITR for a smooth refund process.
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