Taxpayers filing their Income Tax Returns (ITR) for Assessment Year 2026-27 should ensure that interest earned from fixed deposits (FDs) is reported accurately under the "Income from Other Sources" head, as failing to disclose it could trigger tax notices, penalties or delayed refunds.
FD interest is taxable in the year it is earned, irrespective of whether the interest is withdrawn or reinvested. Experts advise taxpayers to cross-check their interest income using the Annual Information Statement (AIS), Form 26AS and bank-issued interest certificates before filing returns.
Tax deducted at source (TDS) on FD interest should also be reconciled with Form 26AS to ensure the correct tax credit is claimed. Any mismatch between the income reported in the ITR and the details available with the Income Tax Department could lead to scrutiny or notices.
Taxpayers should also claim only eligible deductions, choose the correct tax regime and verify their returns after submission to avoid processing delays or penalties. With increased digital data matching through AIS, TIS and Form 26AS, the Income Tax Department can easily identify discrepancies in reported income.
The Income Tax Department has urged taxpayers to review all sources of income carefully before filing returns to ensure accurate reporting and smooth processing.
