TDS on Bank Fixed Deposits

Hello,

When we have fixed deposits in banks, TDS is deducted on the interest accrued (not yet paid to us).
If we break a fixed deposit prematurely, there will be a penalty charged in the interest rate applicable for our deposit.
In such cases TDS deducted and shown in form 26 AS will be more than the amount of interest we actually earned from the deposit, thereby we end up paying more tax than we actually have to pay.
How can we reconcile the calculations in such cases? Can we go by whatever interest we have actually earned and ignore the amount on which TDS is calculated?
Please let me know what is the best option in such scenarios.
Anonymous Asked on April 6, 2018 in Taxations.
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1 Answer(s)

If Interest get reduced due to premature of deposits , we can take the actual interest earned and claim the TDs actually deducted. Tax is on Interest earned. We can always explain when query comes.

TaxIQ Answered on April 9, 2018.
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