Banks must 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 at 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 at 20%.
You can view the details of your TDS deducted in Form 26AS. Form 26AS contains details of tax directly paid by you to the government as advance tax or self assessment tax.
Sometimes the bank may mistakenly deduct TDS at 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:
First note that only the I-T Department can give you a refund on excess TDS, not the bank. This is because the bank has already deposited your TDS with the government.
So 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 take out time to check your Form 26AS on regular intervals, so that if any corrections are required, those can be done on time.