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.
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.
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.
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.
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.
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.
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.
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.’
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.
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.
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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.
If you have a tax-saving fixed deposit, you can claim a deduction for up to ₹1.5 Lakhs.
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.
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.
It usually takes about 3-6 months to get TDS refunds.