What to do if bank has deducted excess TDS on Fixed Deposit

TDS deduction by banks


Usually banks are required under law to deduct TDS on interest income from Fixed Deposits.

Interest income earned up to Rs. 10,000 in a F.Y. is exempt from tds requirement and bank will not be deducting taxes at source in such case.

If the bank has your PAN details then it will deduct 10% TDS from your account.

However, if your PAN details are not available with bank then it will deduct 20% TDS from your account.

In case if you qualify as tax resident of any other country and wish to take the benefit of lower tax rate prescribed under the tax treaty with that particular country, you can submit the copy of your tax residency certificate with your bank. It will then deduct the taxes at rate applicable under tax treaty.


How to find details of TDS deducted?


It is the statutory duty of bank deducting TDS to issue you the certificate in Form 16A. These certificates are issued on quarterly basis and contains all the information relating to your interest income and tds. Alternatively, the details of TDS deducted by bank can be traced in your Form 26AS. You can download your Form 26AS from Income Tax Department’s e-filing portal.

You can find the steps to download your Form 26AS by reading our guide here.

Sometimes, even after providing your PAN details, bank may deduct TDS @ 20% from your account due to mistake from the bank. Your PAN details might be missing from their database or incorrect PAN information has been linked with your account.


What to do if excess tax has been deducted?


Don’t worry if bank has deducted excess TDS. You can do the following things to rectify this:

  • Contact the bank to update your PAN related information.
  • Inform the bank about discrepancy in deducting TDS and ask them to revise the TDS return. Anyone who deducts TDS has to submit a TDS return so you can ask the bank to revise the TDS return they filed earlier.
  • After the bank has filed revised TDS return, information regarding deducted TDS will also get updated in your Form 26AS.
  • Make sure to check your Form 26AS regularly so that you can timely rectify any error.
  • Remember to file your Income Tax Return as you may end up getting a tax refund.

How to avoid paying TDS on bank FD?


  • You can submit a Form 15G and 15H to avoid TDS on interest income. While Form 15G is for Indian residents below 60 years of age, HUFs and trusts, Form 15H is for those above 60. You can use these forms if estimated total income computed as per the Income Tax Act is nil; and, the aggregate of the interest (excluding interest earned on securities) received during the Financial Year should not exceed the basic exemption slab of Rs. 2.5 lakh.
  • Other way to optimize the tax liability and avoiding the TDS is Instead of opening one FD account in your name, you can open multiple FD accounts in the name of other family members who do not fall in tax bracket or are taxed at a rate lower than you.
    For example, you can open one account each in the name of your father, mother, your son or daughter who is above 18 years of age and file a form 15 G/15H for all of them. Then the bank will not deduct the TDS and you will not even have to pay the taxes. But remember that investing in your wife’s or any of your minor kid’s name will not help you in saving taxes.
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