Anomally in tds in fixed deposit(cumulative interest mode)

This query is : Resolved

Kalyan Ghosh (Querist)
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23 June 2015 Sub –Discrepancy in TDS Deducted for F D A/C
I do not know whether I am right or wrong .Only thing I can see that I have to
pay more as TDS for Fixed Deposit(Cumulative Interest Mode) A/Cs
Please note that originally I have made a FD A/C at one SBI branch
with a sum of Rs 100000 on 25/05/2009, Maturity Date-25/05/2014 with rate of interest 8.5%.(Cumulative Interest Basis).Maturity value was Rs 152279.After this A/C got matured on 25/05/2014 I renewed it for 2 years 11 months with interest payment on
quarterly basis at a ROI of 9.25% with a base value of 146287.As per bank officials
TDS of an amount of Rs 152279 minus Rs 146287 =RS 5992 was then deducted),It
may be KINDLY NOTED as follows.Interest accrued and TDS
deducted for the said A/C for five years before maturity is detailed below

Year Interest Accrued TDS Deducted
2009-10 Rs 7402 Rs 741
2010-11 Rs 9369 Rs 937
2011-12 Rs 10130 Rs 1013
2012-13 Rs 10894 Rs 1090
2013-14 Rs 11774 Rs 1175
Total Interest=Rs 49569Total TDS=Rs 4956(A)
Year 2013-14 means up to 31/03/2014.However FD A/C matured on 25/05/14 .Original Invested
Amount was Rs 100000.Maturity Amount was Rs 152279.Total interest of Rs 52279 was paid for this A/C.Considering 10.3% Tax TDS(Bank Norms of 10%TDS) should be Rs 52279 X 10.3%=RS 5385(B) of which A TOTAL TDS OF Rs 4956 was periodically deposited to IT Dept by bank(as shown above)in 5 years.IN ADDITION AT THE TIME OF MATURITY A FURTHER SUM OF Rs 5992 WAS DEDUCTED AS TDS,WHICH MEANS A TOTAL TDS OF Rs 5992+Rs 4956= Rs 10948 WAS DEDUCTED.ACTUALLY TDS DEDUCTED AT THE TIME OF MATURITY SHOULD BE (B)-(A)ie Rs 5385-Rs 4955=Rs 430 only
IF THE ACCOUNTING PROCEDURE IS DIFFERENT WILL YOU KINDLY ILLUSTRATE IT,Otherwise it is better to invest on interest payable on quarterly basis ,where the maturity amount remains the same as invested amount and there will be no Final TDS,only yearly TDS will be deducted for deposit in IT Dept.THE CONCEPT OF 10.3% TDS AT BANK END IS ALSO NOT CORRECT .IF SOMEONE FALLS IN 20%TAX SLAB HE WILL HAVE TO PAY THE Extra Tax AS SELF ASSESSMENT TAX DURING RETURN FILING
On reply from you I will approach bank.With thanks

Kalyan Ghosh

Kalyan Ghosh (Querist)
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25 June 2015 I have no yet received a single feedback.Please help.With thanks

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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14 July 2024 It appears there is confusion regarding the TDS (Tax Deducted at Source) deductions on your Fixed Deposit (FD) account. Let's clarify and address the points based on the information provided:

### 1. Understanding TDS Deductions:

- **Cumulative FD (Fixed Deposit):** This type of FD accumulates interest and pays it out at maturity. TDS is deducted on the interest accrued each year, even though it's paid out at maturity.

- **Quarterly Interest FD:** This type pays interest quarterly, and TDS is deducted on the interest paid each quarter.

### 2. Breakdown of Your FD Transactions:

**Original Cumulative FD ():**
- **Invested:** Rs 1,00,000
- **Maturity Value:** Rs 1,52,279 (after 5 years at 8.5% p.a.)
- **Interest Accrued and TDS Deducted :**
- Total Interest Accrued: Rs 49,569
- Total TDS Deducted: Rs 4,956

**Renewed FD (25/05/2014 onwards):**
- **Base Value:** Rs 1,46,287 (from maturity amount of previous FD)
- **Interest Rate:** 9.25% p.a.
- **Interest Payment:** Quarterly

**TDS Calculation Discrepancy:**
- **Total Interest Paid (2014-2022):** Rs 52,279
- **Expected TDS (at 10.3%):** Rs 5,385 (as per bank's TDS rate)
- **TDS Actually Deducted:** Rs 10,948

### 3. Analysis and Considerations:

- **TDS Calculation Error:** There seems to be an error in the TDS calculation. The bank deducted Rs 5,992 at maturity, in addition to the periodic deductions over the years. The correct TDS at maturity should have been Rs 5,385 minus the total TDS already deducted (Rs 4,956), resulting in an additional TDS of Rs 430, not Rs 5,992.

- **Tax Slab Consideration:** If you fall in a higher tax slab (e.g., 20%), you may need to pay additional tax through self-assessment, as TDS is deducted at a standard rate which may be lower than your actual tax liability.

### 4. Next Steps:

- **Approach the Bank:** Based on the discrepancies noted, you should approach the bank with a detailed calculation breakdown and request clarification on the TDS deducted. Provide them with your calculations showing the expected TDS versus what was deducted.

- **Rectification:** Request the bank to rectify any errors in TDS deduction and refund any excess TDS deducted.

- **Taxation and Investment Strategy:** Consider future investments where TDS is deducted quarterly on interest payments rather than at maturity to avoid such discrepancies.

### Conclusion:

Ensure to document all communications with the bank regarding the TDS issue and seek assistance from a tax consultant if needed to determine your exact tax liabilities and filing requirements. This approach will help in resolving the TDS discrepancy effectively.

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