A fixed deposit (FD) is a type of financial instrument provided by Non-Banking Financial Company (NBFC) or banks that provide the investors with a higher rate of return than an ordinary savings account. It matures after a fixed date. A separate account may not be required for creating a fixed deposit.<\/p>\n
The tenure of fixed deposits can vary from 7 days to 1.5 years and can be a maximum of 10 years. There are additional offers that some banks offer, like loans against fixed deposit certificates.<\/p>\n
The investments made in fixed deposits are considered to be much safer than Post Office schemes as it is backed up by the Deposit Insurance and Credit Guarantee Corporation (DICGC).<\/p>\n
Interest income from fixed deposits should be disclosed every year. It should be shown\u00a0on the accrual basis, i.e., interest earned but not yet received (also known as the mercantile basis of accounting).<\/p>\n
Form 26AS shows the TDS amount and whether TDS is deducted or not.\u00a0The TDS is used by the Income Tax Department to verify an individual\u2019s income tax return.<\/p>\n
Interest earned from fixed deposit should be shown under the head of Interest portion of Income from other sources. For example, if an individual has earned an income of \u20b920,000 (without TDS deduction) and TDS to be deducted is \u20b92,000 (10% of \u20b920,000), then \u20b920,000 should be declared under Income from Other Sources, and \u20b92,000 should be claimed in TDS.<\/p>\n
If deducted on the income from interest, TDS should be claimed by the individual in the Income Tax return and should be shown in the TDS section. The filing information is shown below:<\/p>\n
Income from interest earned on fixed deposits is liable to tax in the hands of the investor\/depositor as per the income tax slab\u00a0of the person. If the person earns above \u20b910 lakhs, he\/she is liable for a 30% tax liability (Education cess and surcharge are to be charged extra). When TDS is deducted, and the person falls under the 30% tax slab category, then he\/she needs to pay the remaining 20% tax.<\/p>\n
Suppose the person has earned an income of \u20b920,000 (without TDS deduction) and TDS to be deducted is \u20b92,000 (10% of \u20b920,000) then \u20b920,000 should be declared under the head of Income from Other Sources and \u20b92,000 should be claimed under TDS.<\/p>\n
After all the other tax details are entered, the total tax liability is calculated.<\/p>\n
For example, in ITR1 Excel, go to the tab\u00a0<\/em>Income Details and click on\u00a0<\/em>Calculate Tax\u00a0<\/em>option to calculate the total tax that the person is liable to pay for the earned income and the deductions that have been declared.<\/p>\n If the person has paid less tax, it will show the difference of tax amount in the \u2018Balance Tax Payable\u2019 row of the Income Tax Details.<\/p>\n In the Excel ITR Forms, the white cells with blue labels represent auto calculating fields and are not be filled by the person. The information on those cells is calculated automatically based on information provided in other cells.<\/p>\n If the person has paid more tax amount, then the excess tax paid will be shown in the tax refund row 18 of \u2018Taxes Paid and Verification.\u2019<\/p>\n If the amount tax is payable and not paid, then Pay Self-Assessment tax using Challan 280.<\/p>\n In many cases, TDS was deducted by banks even though there was prior notification provided by filing Form 15G or Form 15H. Many a time, TDS gets deducted even though income is below the taxable limit. In such cases, the excess tax would be refunded to the individual. The individual can claim a tax refund in the following ways:<\/p>\n Sometimes TDS won\u2019t be reflected in Form 26AS, and in such cases, the individual should contact the bank from where Form 16A was issued. The individual needs to contact the bank and get the information updated in Form 26AS.<\/p>\n In the above-mentioned case, if the individual files a claim for TDS and the following information is absent in Form 26AS, there will be a mismatch in information, and a notice will be served to the individual from the Income Tax Department.<\/p>\n","protected":false},"excerpt":{"rendered":" What Is A Fixed Deposit? A fixed deposit (FD) is a type of financial instrument provided by Non-Banking Financial Company (NBFC) or banks that provide the investors with a higher rate of return than an ordinary savings account. It matures after a fixed date. A separate account may not be required for creating a fixed …<\/p>\nWhat To Do In Case Of Income Tax Refund?<\/h3>\n
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What To Do In Case Of TDS Mismatch?<\/h3>\n