Fixed deposits (FDs) continue to be a preferred investment avenue for many Indian investors seeking stable and hassle-free returns. With attractive interest rates offered by leading players like Bajaj Finance FD, investors can earn a reliable source of income. However, when it comes to managing FD returns, keeping an eye on TDS on FD interest is crucial. Many investors underestimate the importance of tracking Tax Deducted at Source (TDS) on their FD interest, which can lead to receiving an unpleasant IT notice from the Income Tax Department. This is particularly significant for those earning amounts such as 1 lakh fixed deposit interest per month, where TDS implications and filing requirements become critical for compliance.
In this article, we will explore why monitoring TDS on FD interest is essential, how it helps investors avoid IT notices, and the best practices to stay compliant while maximising FD benefits from instruments like Bajaj Finance FD.
Understanding TDS on FD interest in detail
Tax Deducted at Source or TDS is a mechanism used by the Indian government to collect income tax at the source of income itself. When an individual earns interest from fixed deposits such as those offered by Bajaj Finance FD, banks or financial institutions deduct TDS on the interest earned if it exceeds a certain threshold.
TDS threshold limits and rates on FD interest
As per Income Tax rules for the current Financial Year (FY) 2025-26, TDS is deducted on FD interest when the aggregate interest earned in a financial year exceeds Rs. 50,000 for non-senior citizens and Rs. 1,00,000 for senior citizens (above 60 years). The current rate of TDS on fixed deposit interest is 10% for taxpayers who have provided their PAN details, and 20% if PAN is not submitted.
For example, if an investor earns interest exceeding Rs. 50,000 (or Rs. 1,00,000 for senior citizens) annually from their Bajaj Finance FD, TDS will be deducted automatically by the institution. However, if one earns 1 lakh fixed deposit interest per month, the TDS implication magnifies significantly, making it imperative to track deductions carefully. To avoid TDS deduction, eligible individuals with total income below the basic exemption limit can submit Form 15G (or Form 15H for senior citizens) to their bank or financial institution.
Consequences of not tracking TDS on FD interest
Many investors neglect tracking TDS on FD interest, assuming that their banks managing the deduction relieves them from any further responsibility. This belief is misplaced and can lead to serious tax-related issues such as:
– Receiving IT notices: If your total interest income is higher than the TDS deducted, or if TDS has not been deducted due to non-submission of PAN, the Income Tax department may raise queries through notices.
– Additional tax liability: TDS is a prepayment of tax, but the actual tax due may be higher. Without tracking interest and TDS, you may under-report income, leading to demands for additional tax payment with penalties.
– Delayed refunds: Conversely, excess TDS can be claimed as a refund only if income is correctly declared. Lack of proper tracking delays this process.
– Legal complications: Non-compliance with income tax provisions can attract penalties and interest on tax dues.
Therefore, maintaining a record of interest accrued and TDS deducted on instruments like Bajaj Finance FD is vital for efficient tax planning.
Importance of accurate TDS records for fixed deposit interest
Maintaining accurate TDS records on your FD interest helps in the following ways:
Ensuring compliance and error detection
Banks like Bajaj Finance FD provide TDS certificates (Form 16A) after every quarter, which details the TDS deducted against the interest earned. Comparing your FD interest statements with TDS certificates helps detect discrepancies early.
Simplifying income tax filing
Accurate TDS data makes filing income tax returns smoother. You can correctly report your FD interest income and claim credit for TDS deducted. This step particularly benefits those earning 1 lakh fixed deposit interest per month, where multiple deposits might exist.
Enabling better tax planning
By tracking TDS, investors can estimate their total tax liability in advance and plan for additional tax payments if necessary, avoiding surprises during assessment.
How to monitor TDS on FD interest effectively
To stay updated on your TDS on FD interest, follow these best practices, keeping in mind the updated thresholds:
Regularly review FD statements
Keep monthly or quarterly statements issued by the bank to track accrued interest. Bajaj Finance FD investors can easily access these through digital banking facilities.
Collect and verify TDS certificates
Ensure you receive Form 16A from the bank every quarter. Cross-check the TDS amount mentioned with your calculations.
Maintain a consolidated interest summary
If you have multiple fixed deposits with various institutions or multiple FD accounts with Bajaj Finance FD, maintain a consolidated spreadsheet or use financial apps to summarise all interest earned and TDS deducted.
Update your PAN details
To avoid higher TDS rates of 20%, always submit your PAN details to the bank/institution proactively.
Managing tax implications for senior citizens investing in Bajaj Finance FD
The TDS threshold for senior citizens is now Rs. 1,00,000 per financial year. Eligible senior citizens whose total income is below the basic exemption limit can submit Form 15H to the bank/institution to prevent any TDS deduction.
Impact of fixed deposit interest income on your overall tax liability
Interest earned on FDs including Bajaj Finance FD is fully taxable as per your applicable slab rates. Simply relying on TDS may not suffice if your tax slab is higher than 10%. In such cases:
– You are required to pay additional self-assessment tax.
– Failure to do so invites penalties and IT notices.
– Accurate tracking aids in timely payment and helps avoid discrepancies flagged during tax scrutiny.
How Bajaj Finance FD digital platform eases TDS tracking
Bajaj Finance FD offers a user-friendly digital platform where investors can:
– Access FD account statements and interest summaries across tenures.
– Download quarterly TDS certificates (Form 16A).
– Monitor cumulative interest earned and track TDS deductions.
This transparency simplifies compliance and tax filing for investors, especially those managing multiple fixed deposits or earning substantial interest such as 1 lakh fixed deposit interest per month.
Conclusion
Understanding and tracking TDS on FD interest is indispensable for investors seeking to maintain smooth compliance with income tax regulations and avoid receiving IT notices. This holds particularly true for investors earning sizeable interest income, such as 1 lakh fixed deposit interest per month, where even a small oversight can lead to considerable tax hassles.
Choosing a reliable and transparent product like Bajaj Finserv FD not only offers competitive interest rates suited to both senior and non-senior citizens but also supports investors with comprehensive digital tools to track TDS effectively. By keeping a vigilant eye on TDS deductions, reconciling them with interest earned, and timely filing tax returns, investors can ensure peace of mind and seamless tax compliance.
Investing in Bajaj Finance FD, monitoring TDS on FD interest meticulously, and undertaking prudent tax planning are the pillars to secure your financial future while avoiding unexpected IT department notices.
