This article explains when fixed deposits can trigger income-tax, TDS and notices for FY 2025‑26, and how to stay safe by proper ITR filing and documentation.
How IT Department tracks your FD?
Income tax cannot track every one and every transaction but whenever you do Fixed Deposits, the bank reports this high‑value transactions and interest under SFT to the Income Tax Department whenever a PAN is provided, and they appear in AIS/TIS/26AS on the income‑tax portal.
Note:
No Banker will make your FD without PAN card or Aadhar Card and PAN is the main source of reporting to Income Tax Department.
FD Limits
Banks report FD principal amounts under SFT if they exceed limits per PAN per bank per Financial year. The high-value threshold for aggregate FD is up to Rs 10 lakh per PAN per bank per Financial year.
How to avoid TDS on FD interest?
If total interest in one bank in a financial year exceeds Rs 50,000, then bank will deduct 10% TDS for non‑senior citizens and for senior citizens the threshold is Rs 1,00,000.
You can avoid TDS if your overall income is below taxable limit (up to Rs 4 lakh) by submitting Form 15G if your age is below 60 years, or can submit Form 15H if age is above 60 years with income up to Rs 4 lakh or Rs 12 lakh excluding capital gains/crypto etc.
Tax on FD amount
Tax is applicable only on interest which is taxable as income from other sources, not on the FD principal.
When Income Tax Sends Notices?
Notices arise from unreported high-value FDs, especially without ITR.
If you make FD of above Rs 10 lakh but do not file ITR, the department can issue reassessment notice under section 148 and ask:
- Why ITR was not filed, and
- What is the source of FD money.
Notice Time limits
For FDs up to Rs 50 lakh, notice can come within 4 years from end of the relevant FY, and for more than Rs 50 lakh, up to 6 years.
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