Is FD Interest Taxable?
Yes, Interest earned on fixed deposits is fully taxable under the head "Income from Other Sources." It must be disclosed in ITR even if TDS deducted by the bank. The interest income is taxed according to applicable income tax slab.
What If You Forgot to Disclose FD Interest In ITR?
If you forgot to declare your FD interest in ITR for AY 2025-26 and the deadlines for revised or belated returns have expired then do not panic you can fix this omission by filing Updated Return (ITR-U).
Steps To Fix Action Plan
- Go to Income Tax e-Filing Portal and verify the figures to check the exact amount of FD interest reported by your banks against your PAN using:
- Annual Information Statement (AIS)
- Form 26AS
- Bank Interest Certificates
- Calculate the tax liability based on your applicable income tax slab rate.
- Pay the remaining tax, applicable interest, and a mandatory penalty surcharge.
Who Can File an Updated Return?
An ITR-U can generally be filed by taxpayers who has made any mistake or forgot to disclose certain income details in any of the following returns:
- Original return of income
- Belated return
- Revised return
ITR-U can also be filed even if the taxpayer has missed the due date of original return, revised return and belated returns.
Time Limit for Filing ITR-U
ITR-U can be filed within four years from the end of the relevant assessment year.
Additional Tax Required
- 12 months from the end of the relevant AY- 25% of additional tax (tax + interest)
- 24 months from the end of the relevant AY- 50% of additional tax (tax + interest)
- 36 months from the end of the relevant AY- 60% of additional tax (tax + interest)
- 48 months from the end of the relevant AY- 70% of additional tax (tax + interest)
For AY 2025-26, ITR-U can be filed within 31st March 2030.
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