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When you invest in a fixed deposit, you may be liable for tax on the interest earned which will be deducted from the source, that is, the interest itself. Here is your complete guide on how to claim a TDS refund on a fixed deposit in case excess tax has been deducted or you are eligible for exemption. 

 

If you realise that the tax deducted on the interest of your fixed deposit is higher than the actual tax amount payable, you can seek a TDS refund on the fixed deposit. 

 

If you are wondering how to claim TDS on FD interest, read on to know all about the key processes and terms involved. 

  • Basic Exemption Limit

When your income is less than the basic exemption limit, you may have to submit a declaration and notify your bank/NBFC at the beginning of the financial year. In such a scenario, tax will not be deducted from the interest of your fixed deposit. 

 

However, you can claim a TDS refund on a fixed deposit by filing your ITR if the bank/NBFC has still deducted the tax on your interest.

  • Senior Citizens 

In the case of bank FDs, for senior citizens, TDS at 10% is deducted if the interest  income exceeds ₹50,000 in a financial year. 

What is TDS Refund?

Before learning how to get back TDS deducted on FD, understand the meaning of a TDS refund. The refund of TDS (Tax Deducted at Source) is to get back the amount of undue or unwarranted tax that has been deducted from the source of any of your income. 

 

The requirement for a TDS refund exists when the tax deducted at the source is more than the payable tax amount. Additionally, you can claim a refund of TDS in several circumstances if you find yourself eligible for exemption criteria. 

 

If excess tax has been deducted due to non-submission of exemption documents, like investment documents or house rent receipts, you can also claim TDS refund. 

 

In the case of a fixed deposit, tax is deducted from the interest generated on your fixed investment. You can, however, seek a TDS refund on a fixed deposit if you find excess tax has been deducted, or if tax has been deducted despite you fulfilling the exemption criteria. 

 

You should know how to claim a TDS refund on a fixed deposit to seek a refund. Also, know that you have to file your ITR based on your applicable tax bracket. It may take approximately 3-6 months to get the TDS refund on the fixed deposit.

 

Additionally, note that your TDS refund is credited to your savings account. So, providing correct bank details is crucial to avoid any delay. Once you file your returns, the Income Tax Department decides whether to refund the excess tax after proper verification.

 

If you are wondering how to claim a TDS refund on FD as a non-senior citizen, simply submit Form 15G, if your interest earnings for a particular year do not exceed ₹40,000. However, as a senior-citizen investor, you have to submit Form 15H for interest earnings less than ₹50,000 in a particular financial year.

How to Claim TDS Refund on FD Online

If you are eligible for a TDS refund on a fixed deposit, here is how to claim a TDS refund on a fixed deposit online:

  • Visit the Income Tax department portal at www.incometax.gov.in/iec/foportal

  • Register if you are a new user

  • Log in with your credentials

  • Fill the relevant ITR form 

  • Submit the ITR form

  • e-verify the ITR form with your Aadhar-generated OTP and digital signature 

 

By filing the ITR form, you can claim the TDS refund on a fixed deposit. Remember, if your annual income is less than the taxable slab, the tax will not be deducted from your fixed deposits. All you have to do is submit 15G/15H forms at the beginning of the financial year, as mentioned earlier.

How to Check for TDS Return Status

Now that you know how to claim a TDS refund on a fixed deposit, here is how to check the TDS refund status.

  • Step 1: Visit the website of TDS Centralised Processing Cell at https://nriservices.tdscpc.gov.in/nriapp/login.xhtml

  • Step 2: Log in with your user credentials 

  • Step 3: Click ‘Proceed’

  • Step 4: Key in your PAN and TAN details

  • Step 5: Choose the financial year, the quarter and the type of return

  • Step 6: Click on the ‘Go’ tab

By following these steps, you can check the TDS refund status on your screen.

1. Time Period of TDS Refund

You can expect the TDS refund credited to your bank account within a timeline of 3 to even 6 months. However, if there is any delay in the payment of the TDS refund, then you are entitled to interest on the TDS refund amount, which is to be calculated at 6 percent per annum.

 

In case you have not received your TDS refund on time, you can contact your Income Tax Office or check with your employer. 

 2. Interest on TDS Refund

You will receive the TDS refund within three to six months. However, you are entitled to interest on the TDS refund if there is a delay in the refund, per Section 24A of the Income Tax Act. 

 

Also, know that the interest on a tax refund is taxable as it is considered 'income from other sources.’

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How to Verify the Status of a TDS Refund

If you have applied for the TDS refund and have not received it yet, you can verify the status of TDS refund. Here is how you can verify the status: 

  • Step 1: Log in to your e-filing account with your credentials

  • Step 2: Navigate to the E-file section

  • Step 3: Click on the ‘Income Tax Returns’ option

  • Step 4: View the ‘Filed Returns’ tab

  • Step 5: Select the relevant assessment year

  • Step 6: Click on the ‘View Details’ option

  • Step 7: Select ‘Refund Status’ 

 

After completing the process, you can view the ITR filing and ITR e-verification details. 

 

Additionally, you can also verify the TDS refund status by visiting the NSDL website and following these steps:

  • Step 1: Log in to the NSDL website 

  • Step 2: Navigate to the ‘Services’ tab 

  • Step 3: Select the option ‘Status of Tax Refunds’

  • Step 4: Enter PAN details

  • Step 5: Key in the relevant assessment year

  • Step 6: Enter Captcha details

  • Step 7: Click on the ‘Submit’ option

 

Alternatively, you can verify your TDS refund status by filing Form 26AS with your TDS and income details at the Income Tax office.

Conclusion

When you fulfil the eligibility criteria for a tax exemption, and the bank has deducted tax on the interest of your fixed deposit, claiming a tax refund is your right. Hence, knowing how to claim a TDS refund on a fixed deposit is crucial as it is a swift and hassle-free process. You can get additional details regarding the same on Bajaj Markets.

Disclaimer

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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FAQs

How is a fixed deposit taxed?

Interest on fixed deposits is treated as 'income from other sources', according to the Income Tax Act, 1961. Hence, it is fully taxable. The FD interest earned is included in your gross annual income, and the tax is estimated according to the prevailing tax laws.

What is the deduction limit for tax-saving fixed deposits?

If you have a tax-saving fixed deposit, you can claim a deduction for up to ₹1.5 Lakhs.

What is tax deducted at source?

Tax deducted at sources, or TDS, is the tax deduction made at the source of the taxable income like tax is deducted from the taxable salary, interest, commission, or rent amounts.

What if the TDS is more than my total tax liability?

If the TDS is more than your total tax liability, you get the difference amount back as a refund, for which you may have to go through an application process. It will take at least three to six months for the refund to get credited to your account.

How long does it take for a TDS refund?

It usually takes about 3-6 months to get TDS refunds.

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