A Complete Guide to Claiming TDS Refund on a Fixed Deposit

byDilip PrasadLast Updated: April 8, 2024
TDS Payment - How to Make TDS Online Payment?

Traditionally, the interest earned from a fixed deposit or FD attracts tax in India once it crosses the pre-set threshold. In such cases, Tax Deducted at Source or TDS is applicable, and the financial institution holding the deposit is in charge of collecting this tax.

However, in case, individuals realize that the TDS is more than their total tax liability in a year, they can apply for a TDS refund to get the excess deducted amount. Thus, it is important to know how to claim a TDS refund on a fixed deposit and its terms.

Let’s Understand Tax on FD

The interest you earn from the fixed deposit is added to your annual taxable income and is taxed as per the applicable slab rates you fall into. It comes under the ‘Income from Other Sources’ head in your tax receipts.

In the following two situations, you have to pay tax on interest income from a fixed deposit- 

  • When the interest amount is more than Rs. 40,000 in a year for individuals. 
  • When the interest amount is Rs. 50,000 or more in a year for senior citizens.

Having said that, there are two additional points that you must remember –

  • In the case of non-submission of PAN, the TDS rate is 20%; otherwise, it remains 10%.
  • The interest earned by non-residents attracts a TDS of 30%, along with an additional 4% for health and education cess.

Note that the tax is deducted when the interest is credited and not when the FD matures. For example, if you have a fixed deposit for 5 years, the tax will be deducted at the end of every year and not at the end of the maturity period.

However, as an investor you can stop the financial institution from deducting the TDS from the fixed deposit in the following ways: 

  • In case the taxable income of individuals is lower than the exemption limit, they can submit the duly filled-up Form 15G to the financial institution at the beginning of a financial year, stating that they do not have any taxable income. 
  • People aged above 60 years (senior citizens) are exempted from TDS on FD interest. However, if the interest earned exceeds the threshold of Rs. 50,000 annually, TDS will apply to the FD interest. In case your total taxable income is lower than the exemption limit, but the interest income is more than the threshold, you have to submit a 15H Form to declare that you do not have taxable income. 

Besides the pointers above, if in any other case the banks or financial institutions deduct TDS on FD, you can claim a refund by ITR filing

How to Claim TDS Refund on a Fixed Deposit?

To facilitate a smooth and hassle-free TDS refund process, you can claim it online. If you want to know how to claim a TDS refund on a fixed deposit online, follow the steps below:

Step 1: Firstly, you have to visit the website of the I-T department of India and register yourself. 

Step 2: Once you’re successfully registered, download the necessary Income Tax Return (ITR) Forms required for your tax filing.

Step 3: Now, fill in the relevant information in these forms. Afterward, upload them to the website and simply click on ‘Submit’.

Step 4: Once you’ve submitted your return, you’ll get an acknowledgment slip. Verify your return electronically. You can do this using a digital signature, an Aadhaar-based OTP, or even through your net banking account.

Step 5: In case you fail to e-verify the income tax return request, you need to send the hard copy of the same to the I-T department. 

How to Check the TDS Refund on FD Status Online?

Step 1: Visit the IT department website and log in to your ITR account.

Step 2: Browse through the e-file section.

Step 3: Open the ‘Income Tax Return’ tab.

Step 4: Check the ‘View Filed Returns’ section.

Step 5: Select the correct assessment year and open the ‘View Details’ tab.

Step 6: Click on the ‘Refund Status’ to check the details.

Alternatively, you can also check the TDS refund status through the NSDL website. 

Fixed deposit is one of the most preferred investment options for individuals who are not willing to take too many risks with their money. But, like any other investment option, it also entails paying taxes on the earnings when you cross the particular threshold. However, the IT department has provisions to help you apply and get the TDS return to ensure you are not paying taxes twice, reducing your income tax liabilities.


Is the Tax Deducted at the Source refund taxable?

Since the TDS refund is the excess amount you paid as tax, it is not considered income. Therefore, the TDS refund is not taxable.

How long it takes to get TDS refund?

Usually, it takes 3-6 months to get a refund of TDS. Since the refund amount is directly deposited to the bank account of the applicant, the time required for a TDS refund depends on the time taken for e-verification.

What to do if the government delays the TDS refund payment?

The government is liable to pay a simple interest of 6% a year to the assessee on the amount to be refunded.

What is the fastest way to claim a refund for TDS on FDs?

The fastest way to claim a refund for TDS on FDs is to apply online with all the relevant tax and FD interest details within the due date.

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