Banks have to deduct TDS on interest income from Fixed Deposits when interest from one FD or sum of all FDs with the bank is more than Rs 10,000 in a year.
- If your PAN details are available with the Bank, TDS will be deducted @ 10% from your Interest accrued at the end of each year. Banks have to deduct interest that is due at the end of each year, it may not be actually paid.
- If the Bank does not have your PAN details in its records, they will deduct TDS @ 20%.
You can view the details of your TDS deducted in Form 26AS. It also has details of Tax directly paid by you to the government as advance tax or self assessment tax.
Sometimes the Bank may mistakenly deduct TDS @ 20%, when you do have a PAN, but this information was missed by the bank or not available with them, or your PAN was incorrect in their records. Since all the information in your Form 26AS is linked with your PAN, this TDS may not get reflected in your Form 26AS. In such a case you may not be able to claim this TDS against your final tax payable on your Income.
If excess TDS has been deducted by the bank, here are the steps you need to take to correct the situation –
- Reach out to the bank and request them to update their records with your PAN details
- Inform the bank about the discrepancy in TDS deduction and request them to revise the TDS return they submitted. Anyone who deducts TDS has to submit a TDS Return of all the TDS deducted by them and that is how this information reaches your Form 26AS. When they revise their TDS return and include your PAN details, this TDS will then get reflected in your Form 26AS correctly.
- Once this TDS is reflected in your Return you can adjust it from your final tax liability if any. You may also end up with a refund due from the government if you did not have any tax payable. Do note that the refund of excess TDS can be done by the IT Department, since this TDS has already been deposited by the Bank. Therefore the bank shall not be able to make any refunds to you.
- Do take out time to check your Form 26AS on regular intervals, so that if any corrections are required, those can be done timely.
In our next post we will take a look at what should you do if your total income for a year is within the minimum exemption limit of Rs 2,50,000 and you are not liable to pay any tax, should the bank still deduct TDS on your Interest Income?