Overview
For Assessment Year 2026–27 (Financial Year 2025–26), individuals whose sole source of income is interest from Fixed Deposits are eligible to file their return using ITR-1 (Sahaj). This return form is expressly intended for taxpayers with income comprising salary, one house property, and "other sources" like interest from bank deposits.
Where to show FD interest?
FD interest is shown in ITR-1 under B4: Income from Other Sources. The instructions specify that interest from bank, post-office, or cooperative society deposits goes here, and the online utility also prompts you to mention the nature of the income.
Key Eligibility Requirements
Before you proceed, ensure you meet these conditions to use ITR-1:
- Resident Status: You must be an Ordinary Resident individual.
- Income Limit: Your total income for the year should not exceed ₹50 lakh.
- Income Sources: Your income must be limited to specified sources. Income from Fixed Deposit interest is explicitly allowed under the "Income from Other Sources" head.
What to include?
When filing, enter the total gross FD interest for the year, not just the post-TDS amount that was credited. In case TDS was deducted on this interest, you can claim that credit in the TDS schedule. Refer to your Form 26AS or AIS for the accurate figures.
Step-by-Step Reporting in ITR-1
Start by going to the Gross Total Income schedule on the e-filing portal.
- Locate the Section: Open "Schedule: Income from Other Sources."
- Select Interest Type: Choose "Add Details" under "Interest from Deposits (Bank / Post Office / Cooperative Society)."
- Enter Total Accrued Interest: Fill in the gross FD interest for the full FY 2025–26 (from April 1, 2025 to March 31, 2026).
- Include Savings Account Interest: If your FD interest was credited to a savings account, also include that savings account interest in its separate line.
Important: Report interest on an accrual basis. This means you must include interest that was credited or earned during the year, regardless of whether the FD matured or you actually withdrew the funds.
Reconcile with Official Documents Before Submitting
Do not rely solely on bank passbook entries. Cross-check your figures against three main documents.
- Annual Information Statement (AIS) and Form 26AS: Log in to the income tax portal and check your AIS or 26AS to see what banks have reported.
- Interest Certificates: Download the Interest Certificate for FY 2025–26 directly from your net banking portal for each bank where you hold FDs.
- Reconcile Tax Deducted at Source (TDS): If a bank deducted TDS (under Section 194A), ensure it reflects in Schedule: Tax Paid or Form 26AS so you get full credit (or a refund) for the tax already deducted.
Claim Applicable Tax Deductions
Depending on the tax regime you choose and your age, you may be eligible to lower your taxable income through the following deductions.
- Senior Citizens (Age 60 and above): Under Section 80TTB (Old Tax Regime), you can claim a deduction of up to ₹50,000 on interest earned from bank or post office deposits, which includes both FD interest and savings account interest.
- Individuals Below 60 Years: Under Section 80TTA (Old Tax Regime), you can claim a deduction of up to ₹10,000. However, this applies only to savings account interest and does not cover FD interest.
Click Here To Know In Details about Individual Income Tax Return Filing Last Date For FY 2025-26
FAQs
1. What is a very common mistake people make with savings account interest?
A major misconception is that savings bank interest is completely tax-free. This is not correct. Savings bank interest is fully taxable and must be reported under "Income from Other Sources." The deduction you can claim (up to ₹10,000 under Section 80TTA, or ₹50,000 for senior citizens under Section 80TTB) is a separate step that comes after you have reported the income. In simple terms: taxability and deduction are two different things. You must report the income first before you can claim any deduction for it.
2. My FD interest is reinvested, not paid out. Do I still have to report it?
Yes, absolutely. The taxability of FD interest does not depend on whether you have physically withdrawn the money. Even if you have chosen to reinvest the interest, it is still considered income earned during that financial year and must be reported in your ITR.
3. I have a joint FD account. Whose income is it, and how is it reported?
This is a common point of confusion. For a joint account, the income is generally taxable in the hands of the person who is the beneficial owner of the funds, i.e., the person who actually provided the money for the deposit. The tax department looks at who the actual contributor is, not just who is named on the account.
Each account holder must report their respective share of the interest income in their own ITR. Both individuals are responsible for including their portion of the interest.
4. What if my spouse or minor child has FD interest? Can I still file ITR-1?
This is a critical point. If you have what is called "clubbed income" (e.g., your spouse's FD interest or your minor child's interest that must be clubbed with your income), you cannot file ITR-1.
ITR-1 does not contain Schedule SPI, which is the specific schedule required to report clubbed income. If you have any such income, you must file ITR-2 (if you don't have business income) or ITR 3 (if you have business income). Filing ITR-1 while having clubbed income will lead to a mismatch notice from the Income Tax Department.
5. I have already filed my ITR but forgot to report my FD interest. What can I do?
If you realize you have omitted FD interest after filing your return, you can file an Updated Income Tax Return (ITR-U). This is a provision that allows you to rectify mistakes in a previously filed return. However, be aware that filing an updated return comes with conditions and may require you to pay additional tax and interest, depending on when you make the correction.
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