Taxpayers earning interest from fixed deposits during financial year 2025-26 must report this income while filing their income tax return (ITR) due on July 31, 2026. According to reports from Mint, interest from fixed deposits is fully taxable and reported to the income tax department by banks, making correct disclosure essential to avoid tax notices or ITR mismatches.
Interest from fixed deposits is taxable under the head 'Income from other sources' in relevant ITR forms and added to total income for taxation at applicable slab rates. As reported by Mint, under the old tax regime, principal amounts deposited for five years qualify for deduction under Section 80C with a limit of ₹1.5 lakh. Resident senior citizens can claim additional deduction of up to ₹50,000 on interest from savings accounts, fixed deposits or recurring deposits under Section 80TTB.
According to Mint reports, TDS is applicable at 10% if interest exceeds ₹50,000 for resident general citizens and ₹1 lakh for senior citizens. For PAN non-providers, TDS applies at 20%. Depositors can claim TDS relief by furnishing Form 15G (below 60 years) or Form 15H (senior citizens) to avoid deduction, though these forms have been replaced by unified Form 121 under the Income-tax Act, 2025.
Taxpayers can verify FD interest income through bank statements, Form 26AS, Annual Information Statement (AIS) or Taxpayer Information Statement (TIS) available on the income tax department's e-filing portal. As reported by Mint, the basic exemption limit under the old tax regime is ₹2.5 lakh for individuals below 60 years and ₹3 lakh for senior citizens, while the new tax regime offers ₹4 lakh limit for all individuals.
