Tax Deducted at Source (TDS) plays a crucial role in ensuring tax compliance in India. For investments such as fixed deposits (FDs) and savings accounts, understanding how to check the TDS amount deducted is important for effective financial planning and meeting your tax obligations.
This article walks you through the process of how to check TDS amount on fixed deposits and savings accounts while also providing an overview of the types of TDS and the calculation involved.
Understanding TDS on Fixed Deposits and Savings
TDS is deducted by banks or financial institutions to ensure that tax liability arising from interest income is collected at source itself. When you earn interest on fixed deposits or savings accounts, it is categorised as Income from Other Sources under the Income Tax Act, 1961. The TDS deducted by the institution is essentially a part payment of your total tax liability to the government.
TDS on Fixed Deposits (FDs)
Interest earned on FDs is subject to TDS if it exceeds the threshold limit of ₹40,000 per annum (or ₹50,000 for senior citizens). It is deducted at a rate of 10% if your Permanent Account Number (PAN) is provided to the bank. However, if your PAN is not submitted, the rate of TDS rises to 20%.
For instance:
- If you earn an interest of ₹60,000 in one financial year and have provided your PAN, the TDS deducted will be ₹6,000 (10% of ₹60,000).
- If your PAN is not provided, TDS will be ₹12,000 (20% of ₹60,000).
TDS on Savings Accounts
Unlike FDs, TDS is not directly deducted on savings accounts. However, interest earned above ₹10,000 per annum (₹50,000 for senior citizens under Section 80TTB) is taxable. Although no TDS is deducted by banks on savings accounts, you are still liable to report this income and pay tax according to the applicable income tax slab.
Types of TDS on Interest Income
The types of TDS applicable to interest income can be broadly categorised as follows:
- TDS on Interest from Fixed Deposits: This is applicable when your annual interest exceeds ₹40,000 (₹50,000 for senior citizens). It is deducted at 10% of the interest amount if the PAN is provided.
- TDS on Interest from Savings Accounts: TDS is not deducted by banks in this case, but any interest earned above ₹10,000 (₹50,000 for senior citizens) is taxable. This needs to be declared in your income tax return (ITR).
How to Check TDS Amount on Fixed Deposits and Savings?
1. Check Your Bank Account Statement
TDS deducted on FD interest is reflected directly in your bank account statement. Banks usually show the TDS amount credited to the government against your fixed deposit interest income.
Example: Suppose you have invested in an FD and earned ₹50,000 as interest in one financial year. If TDS of ₹5,000 (10% of ₹50,000) has been deducted, your bank statement will show:
- Credit: ₹50,000 (Interest payment before TDS)
- Debit: ₹5,000 (TDS deduction)
2. Examine Form 16A Provided by Banks
Banks and financial institutions issue Form 16A quarterly, which serves as a TDS certificate. This form provides details such as:
- Name and PAN of the deductor
- TDS amount deducted
- Total interest income earned
You can obtain Form 16A from your bank through internet banking or request a physical copy from your branch.
3. Access Form 26AS (TDS Statement)
Form 26AS is a consolidated tax statement that captures details of all the taxes deducted against your PAN. You can use this form to check TDS amount deducted on your fixed deposits and savings accounts.
Steps to access Form 26AS:
- Visit the official Income Tax e-filing website: www.incometax.gov.in.
- Log in to your account using your credentials. If you do not have an account, register with your PAN and follow the instructions.
- After logging in, select ‘View Form 26AS’ under the “e-File” section.
- You will be redirected to the TRACES website. Accept the terms and conditions and view your Form 26AS.
- Download the form in PDF format. Under ‘Part A’, you can check the TDS deducted against your fixed deposit interest or savings account income.
4. Verify TDS through Net Banking
Many banks provide the facility to check TDS details via their respective internet banking platforms. Log in to your net banking account and navigate to the section titled ‘Tax Credit Statement’ or a similar term. Once there, you can download entries reflecting the TDS amount deducted.
5. Consult the Annual Information Statement (AIS)
The Annual Information Statement (AIS) is a comprehensive financial account summary provided by the Income Tax Department. It includes records of interest income and TDS deducted. The AIS is accessible on the Income Tax e-filing portal.
Calculating TDS on Fixed Deposits and Savings
Let us walk through a simple example to calculate TDS: Let’s assume you have multiple fixed deposits across different banks earning the following interest amount during a financial year:
- FD 1 (Bank A): ₹30,000
- FD 2 (Bank B): ₹20,000
- FD 3 (Bank C): ₹15,000
- Consolidate interest earned: Total interest earned = ₹30,000 + ₹20,000 + ₹15,000 = ₹65,000
- Deduct the exemption threshold: Statutory Threshold = ₹40,000 for individuals below 60 years. Taxable Interest = ₹65,000 – ₹40,000 = ₹25,000
- Apply TDS rate: TDS at 10% = ₹65,000 × 10% = ₹6,500 (assuming PAN is provided). If PAN is not provided, TDS at 20% = ₹65,000 × 20% = ₹13,000.
Understanding the Applicability of TDS
While checking the TDS amount, it is important to note:
- If your total income falls below the minimum taxable income limit (₹2.5 lakh for individuals below 60 years, ₹3 lakh for senior citizens, and ₹5 lakh for super senior citizens), you can prevent TDS by submitting Form 15G (for non-senior citizens) or Form 15H (for senior citizens).
- Even though TDS is deducted on your interest income, you may have to pay additional tax if your income tax slab rate exceeds 10%. For instance, if you fall under the 30% tax slab, you must pay the additional 20% tax (30% – 10% TDS already deducted) on your interest income.
Disclaimer
TDS on fixed deposits, savings accounts, and other forms of interest income is mandatory and ensures tax compliance. However, individual tax liability may differ based on income levels, exemptions, and applicable deductions. It is crucial to keep track of your taxable income, file accurate returns, and consult financial experts when necessary. The Indian financial market carries inherent risks, and investors are advised to carefully assess all risk factors before proceeding with any investments.
Summary
TDS, or Tax Deducted at Source, is a mechanism used by banks and financial institutions to deduct tax at the source of income like interest earned on fixed deposits and savings accounts. For fixed deposits, TDS is liable to be deducted if your annual interest exceeds ₹40,000 (₹50,000 for senior citizens) at a standard rate of 10% (20% if the PAN is not provided). On the other hand, TDS is not deducted directly on savings accounts, but interest earned above ₹10,000 (₹50,000 for senior citizens) is taxable under the investor’s applicable tax slab.
You can check the TDS amount through various avenues, such as your bank account statement, Form 16A provided by the bank, Form 26AS accessible on the Income Tax e-filing portal, or the Annual Information Statement (AIS). The calculation of TDS depends on your total interest income and applicable tax rate.
Efficient monitoring of TDS deductions is critical for tax compliance and accurate income tax return filings. However, it is recommended to consult a tax expert or financial advisor to better understand your specific tax liability and compliance requirements. Taxpayers are encouraged to assess the risks and benefits before making any financial decisions related to investments and taxation.
