Forgot to Claim TDS from Interest Income? Here’s How to Revise
- Farheen Mukadam
- Sep 15
- 10 min read
Tax Deducted at Source (TDS) is one of the most significant components of the Indian tax system. It ensures that taxes are collected at the point of income generation rather than later, reducing the chances of tax evasion. Interest income, whether from fixed deposits, savings accounts, or bonds, is one of the common sources of income that is subject to TDS. Understanding how TDS on interest income works is essential for taxpayers to ensure compliance and avoid penalties. In some cases, taxpayers might miss claiming the TDS initially, which could lead to discrepancies in their filed tax returns. Lets explore how TDS works on interest income, the process for revising and claiming TDS that wasn’t initially claimed, and important points to remember when revising your TDS claims.
Table of Contents
Understanding TDS on Interest Income
TDS is deducted by the bank or financial institution at the time of crediting the interest income to the taxpayer’s account. The rate of TDS varies based on the type of account and the taxpayer’s status (individual, senior citizen, etc.). The general rate of TDS on interest income is 10%. However, if the taxpayer fails to provide their PAN (Permanent Account Number), the TDS rate increases to 20%.
For senior citizens, there is an exemption limit on interest income under Section 80TTB of the Income Tax Act, where the total interest income up to ₹50,000 is not subject to TDS. Additionally, the TDS deduction is only applicable when the interest income exceeds ₹40,000 for non-senior citizens and ₹50,000 for senior citizens in a financial year, across all accounts held with a particular bank or financial institution.
Banks are required to issue a TDS certificate (Form 16A) that reflects the amount of TDS deducted on interest income, which can be used for filing the income tax return.
How to Revise and Claim TDS that Was Not Claimed Initially
If TDS on interest income was not claimed when initially filing your Income Tax Return (ITR), you can claim the TDS amount by revising your return. Here is how you can do it:
File a Revised Return:
Log in to the Income Tax e-filing portal.
Select the option to file a revised return.
Make sure to select the relevant assessment year.
In the revised return, provide the correct details of the TDS that was missed in the original return.
Update TDS Details:
In the revised return, navigate to the section where income is reported.
Under the "Income from Other Sources" section, provide the interest income details, including the TDS that was not originally claimed.
Ensure that you provide the correct TDS deduction details as mentioned in the TDS certificate (Form 16A).
Calculate the Impact:
The system will automatically adjust the refund or tax liability based on the revised TDS claim. If you’re eligible for a refund, the tax department will process it after verifying the revised return.
It’s important to note that the revised return must be filed within the prescribed time limits, which are typically before the end of the assessment year.
Important Points for Revising TDS Claims
Timely Revision: You can only revise your ITR within the same assessment year. For example, for FY 2024-25 (Assessment Year 2025-26), the last date to file a revised return is December 31, 2025. After that, you won’t be able to make changes to the filed return.
Ensure Correct TDS Details: When revising the return, make sure that the TDS amount matches the figures mentioned in Form 16A (TDS certificate issued by the bank or financial institution). Any discrepancies can delay the refund or cause a mismatch.
Impact on Tax Calculation: If the TDS that was not initially claimed reduces your overall tax liability, you may be entitled to a refund. However, ensure that you have accurate figures to avoid any further issues during the refund processing.
Check for Other Deductions: While revising your return, ensure that you haven’t missed claiming other deductions, such as those under Section 80C, 80D, etc. If there are additional deductions, update them in the revised return to optimize your tax liability.
TDS Exemption Thresholds and Forms
Tax Deducted at Source (TDS) is a mechanism through which tax is deducted at the source of income before it reaches the taxpayer. Understanding TDS exemption thresholds and the relevant forms is crucial to avoid paying excess tax and to ensure that any excess TDS deducted can be refunded through the Income Tax Return (ITR) process. Below are the key TDS exemption thresholds based on different categories of taxpayers and the forms associated with TDS:
TDS Exemption Thresholds for Different Taxpayers
1. For Non-Senior Citizens:
For non-senior citizens, TDS is applicable on interest income when the total interest exceeds ₹40,000 in a financial year. This limit applies to interest from savings accounts, fixed deposits (FDs), recurring deposits (RDs), and any other interest-bearing investments.
If the total interest income from all sources is below this threshold, no TDS will be deducted by the bank or financial institution. This means you will receive your interest without any tax deductions at the source, and you’ll only need to pay tax on it when filing your ITR, based on your overall income.
For example:
If you earn ₹35,000 in interest from your bank savings account, there will be no TDS deducted.
If you earn ₹45,000 in interest from your FD, TDS will be applicable on the ₹45,000, and the bank will deduct tax at the applicable rate.
2. For Senior Citizens:
Senior citizens (aged 60 years and above) enjoy a higher exemption limit for interest income under Section 80TTB of the Income Tax Act. The exemption threshold for senior citizens is ₹50,000, which applies to interest earned from savings accounts, fixed deposits, recurring deposits, and similar sources of interest income.
Senior citizens can thus avoid TDS deductions on interest income up to ₹50,000. This additional ₹10,000 exemption over the regular limit of ₹40,000 allows senior citizens to receive more of their interest income without tax deduction at source.
For example:
If a senior citizen earns ₹48,000 in interest from an FD, no TDS will be deducted since the amount is below the ₹50,000 exemption limit.
However, if a senior citizen earns ₹55,000, TDS will be deducted on ₹55,000, and the excess TDS paid over ₹50,000 will be eligible for a refund.
Note: The exemption is only for interest income and does not apply to other forms of income such as salary or rental income.
Forms Related to TDS
When TDS is deducted by banks or financial institutions, they issue certain forms to ensure that the deduction is properly reflected in the taxpayer's record. These forms are important for cross-checking and ensuring that the TDS amount deducted matches the taxpayer’s actual tax liability. Below are the key forms related to TDS:
1. Form 16A:
Form 16A is the TDS certificate issued by the deductor, typically the bank or financial institution. It provides details of the TDS deducted on interest income.
The certificate includes the name and PAN of the taxpayer, the amount of interest paid, the amount of tax deducted, and the date on which the TDS was deducted.
You should receive Form 16A from your bank or financial institution if they have deducted TDS on your interest income. It is important to keep this form as evidence for filing your ITR and for reconciling the TDS information during tax assessments.
2. Form 26AS:
Form 26AS is a consolidated statement provided by the Income Tax Department that shows the details of TDS deducted on your behalf, including interest income, salary, and other sources of income.
This form allows you to cross-check the TDS deductions shown in your Form 16A against the TDS deducted as per the records in the Income Tax Department.
Form 26AS also displays the details of tax paid, advance tax, and self-assessment tax. It is essential to verify the details in this form to ensure that the TDS deducted by the bank or other deductors has been properly recorded by the Income Tax Department.
How to Access Form 26AS:
You can view and download Form 26AS by logging into your account on the Income Tax Department’s e-filing portal.
Once logged in, navigate to the 'ViewForm 26AS' section under the 'My Account' tab.
Cross-Checking TDS Information:
Ensure that the TDS deducted on your interest income, as reflected in Form 16A, matches with the information in Form 26AS.
If there is a discrepancy (for example, if your bank claims TDS was deducted but it’s not reflected in Form 26AS), you need to follow up with the bank to resolve the issue before filing your ITR.
Refund of Excess TDS Paid
If TDS has been deducted in excess (i.e., more than the exemption limit), you are entitled to claim a refund of the excess amount when you file your ITR. Here's how the process works:
Excess TDS on Interest: For instance, if a senior citizen earns ₹55,000 in interest and TDS is deducted on the entire amount (₹55,000), they will have paid ₹5,000 in excess TDS because they are only exempt up to ₹50,000.
Filing the ITR: When filing the ITR, the taxpayer can report the total interest income, and the TDS deducted will be reflected in Form 16A and Form 26AS.
Claiming the Refund: The excess TDS paid over the exemption limit will be refunded to the taxpayer after processing the return by the Income Tax Department. This refund can be received directly in the taxpayer’s bank account.
Conclusion
TDS on interest income is a crucial aspect of tax compliance that ensures tax collection at source, making it easier for taxpayers to pay their taxes without worrying about large tax liabilities. However, if TDS has not been claimed initially, taxpayers can revise their returns and claim the missed deductions. The key is to ensure that all necessary documentation, such as Form 16A and Form 26AS, is correctly referred to when filing a revised return. By understanding the exemption thresholds and the proper procedures for revising TDS claims, taxpayers can ensure that they minimize their tax liabilities and avoid penalties. For a more seamless filing process, using a platform likeTaxBuddy mobile app can help simplify TDS claims and ensure that all relevant deductions are correctly accounted for.
FAQs
Q1: Can I claim TDS on interest income if I missed it while filing my ITR?
Yes, you can claim TDS on interest income by filing a revised return. This can be done within the same assessment year. The revised return allows you to include any missing information, such as TDS details, which were initially omitted during the original filing. By filing the revised return, you can claim the TDS credit that was missed and reduce your tax liability.
Q2: How do I revise my ITR to claim missed TDS?
To revise your ITR, log in to the Income Tax e-filing portal. Once logged in, select the option to file a revised return (under the "Income Tax Returns" section). You will need to select the original return you filed and make the necessary updates, including adding the missed TDS details from Form 16A (or other relevant documents). After updating, submit the revised return, and it will be processed with the updated TDS information.
Q3: What is the exemption threshold for TDS on interest income for senior citizens?
Senior citizens are eligible for an exemption of TDS on interest income up to ₹50,000 under Section 80TTB of the Income Tax Act. This applies to income earned from interest on fixed deposits, savings accounts, and other specified sources. If the interest income exceeds ₹50,000, TDS will be deducted by the bank at the applicable rate.
Q4: What documents do I need to claim TDS on interest income?
To claim TDS on interest income, you will need the following documents:
Form 16A: This is the TDS certificate issued by the bank or financial institution, showing the TDS deducted on your interest income.
Form 26AS: This form provides a summary of all taxes deducted on your behalf. It includes details of TDS credited to your account by banks, employers, or other entities. Ensure that the TDS amount in Form 26AS matches the details in Form 16A for accurate reporting.
Q5: What happens if I don't revise my return to claim missed TDS?
If you fail to revise your return to include the missed TDS, you will not be able to claim the TDS credit. This could result in overpaying taxes, as the TDS that was already deducted would not be factored into your total tax liability. Additionally, you may miss out on any potential refund that you could have received from the TDS amount.
Q6: How can I check if the TDS is correctly reflected in my ITR?
You can check if the TDS is correctly reflected in your ITR by reviewing Form 26AS, which shows all the TDS details against your PAN. Compare the information in Form 26AS with the TDS certificate (Form 16A) issued by your bank or financial institution. If there is a mismatch, you should revise your return and correct the details.
Q7: What is the last date to revise my ITR for claiming missed TDS?
The last date to file a revised return to claim missed TDS is the end of the assessment year, typically December 31 of the following year. For example, for FY 2024-25 (Assessment Year 2025-26), the last date to file the revised return is December 31, 2025.
Q8: Is TDS deducted on all types of interest income?
TDS is deducted on interest income exceeding ₹40,000 for non-senior citizens and ₹50,000 for senior citizens. This applies to interest earned from sources like fixed deposits, recurring deposits, savings accounts, and bonds. If the interest income falls below these thresholds, no TDS is deducted.
Q9: Can I claim TDS if the bank did not deduct it on my interest income?
If the bank did not deduct TDS on your interest income when required, you can still claim the TDS credit by paying the tax directly through self-assessment tax and declaring it in your ITR. In such cases, you won’t get the benefit of TDS, but you can claim it by paying the tax and reporting it correctly in your return.
Q10: Does TaxBuddy help with revising ITR to claim missed TDS?
Yes,TaxBuddy provides assistance for filing revised returns to ensure that missed TDS is claimed correctly. The platform guides you through the process of revising your return and ensures that your TDS details are updated accurately, so you can claim the correct refund and avoid any penalties.
Q11: How long will it take to process my refund after revising my ITR?
Once you file a revised return, the Income Tax Department will process the return as per the usual timelines. However, since a revised return is treated as a new filing, it may take longer than the standard processing time. You can track your refund status via the Income Tax e-filing portal.
Q12: Will I be penalized for filing a revised return?
No, you won’t be penalized for filing a revised return as long as you do so within the prescribed time limits (before the end of the assessment year). A revised return is simply an opportunity to correct errors or omissions in the original filing. However, if the revised return shows a higher tax liability, you may have to pay additional taxes, along with interest.
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