Why do Bank Deducts TDS ?
Banks must deduct TDS as per income tax act 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.Through TDS, Income tax department tracks persons who has earned interest income during the year and whether person is filing income tax return.
- If your PAN (Permanent Account Number is 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 in its records, they will deduct TDS at 20%.
Where you can check TDS deducted by Bank ?
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.
Refer How to Check 26AS ( Income Tax TDS ) Online
Why to check Your TDS deducted by Bank in 26AS
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 in your Income Tax return.
What to do if Excess TDS Deducted by Bank ?
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 Income Tax 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 26AS , you can adjust it from your final income tax liability if any.
- You may also claim refund due from the government if you did not have any tax payable for that year.
Have you checked your TDS Certificate ?
How to Verify TDS Certificate of Income Tax online
How to Download 26AS in Excel from Traces Website
How to Convert Form 26AS Text File to Excel File
How to check TDS Mismatch in income Tax Return
No Demand in case Tax Credit Mismatch due to TDS
Pingback: TaxHeal - GST and Income Tax Complete Guide Portal