TDS on Your Salary, Rent and FD: How to Get It Back

Most people meet TDS without ever choosing to. Your salary lands a little lighter than the offer letter promised. The bank quietly skims your fixed deposit interest. A tenant suddenly asks for your PAN. Tax Deducted at Source is the government collecting income tax in advance, at the moment money changes hands, and it touches almost every working Indian in at least three places: pay, rent and savings. The catch is that TDS is only an estimate. If too much was taken, nobody mails it back to you. You have to ask for it, and the only valid way to ask is by filing a return.

Here is what actually gets deducted in FY 2025-26, at what rate, and the precise route to reclaim every rupee you overpaid.

Why TDS on salary rarely needs reclaiming

Your employer deducts tax under Section 192, and this is the one deduction designed to be roughly accurate. At the start of the year the payroll team estimates your annual income, applies the tax regime you picked, and spreads the resulting tax evenly across twelve months. Because it is recalculated each month as bonuses or investment proofs come in, salaried people who declare everything honestly usually end the year close to zero balance.

Two things decide how much comes out. First, your tax regime. The new regime is the default now, and under it the standard deduction is Rs 75,000 against Rs 50,000 in the old regime. Second, the rebate. For FY 2025-26 the enhanced Section 87A rebate of up to Rs 60,000 means a salaried person with taxable income up to Rs 12 lakh (around Rs 12.75 lakh of gross salary, after the standard deduction) pays no tax at all under the new regime.

That last point matters for refunds. If your income sits under that ceiling but your employer deducted TDS anyway, or you switched jobs and both employers gave you the basic exemption twice, you will have a refund waiting. The fix is the same as for everyone else: file and claim.

What the bank takes from your FD, and the new limits

Fixed deposits are where people lose the most TDS without noticing, and where the rules just changed in their favour. Banks deduct under Section 194A at 10% if your PAN is registered, and a punishing 20% if it is not.

From 1 April 2025, the thresholds were raised:

• General depositors: TDS kicks in only once interest from that bank crosses Rs 50,000 in a financial year (up from Rs 40,000).
• Senior citizens (60 and above): the limit is now Rs 1,00,000 (up from Rs 50,000), for banks, cooperative banks and post office schemes.
• For interest from other sources, such as company deposits, the older Rs 5,000 limit rose to Rs 10,000.

A point that trips many people up: the threshold is per bank, not per branch, and it is calculated across all your deposits with that bank. Also, the bank deducts TDS at a flat 10% regardless of which slab you fall in. So if your overall income is below the taxable limit, that 10% was money you never owed. It does not vanish; it is sitting in the tax department's account against your PAN, and a return brings it home.

How tenants became tax collectors

Rent is the surprise on this list. If you are an individual or HUF not running a business and you pay more than Rs 50,000 a month for a house, you are legally a tax deductor under Section 194-IB. The rate was cut from 5% to 2% effective 1 October 2024, which softened the blow, but the responsibility is real.

The mechanics are forgiving by design:

• You deduct 2% of the rent, but only once a year, on the rent for the last month of the financial year (or the month you vacate, if earlier).
• You need your landlord's PAN. Without it, you must deduct at 20%, and the landlord loses easy credit for it.
• You pay it using Form 26QC, an online challan-cum-statement, and then give your landlord a Form 16C certificate.

Businesses and companies operate under the older Section 194-I instead, deducting 10% on rent for land or buildings once annual rent crosses Rs 50,000 a month. For salaried tenants, the practical takeaway is simpler: if your rent has crept past Rs 50,000, that deduction is now your job, and skipping it carries interest and penalties.

Stop the deduction before it happens

Sometimes the smartest move is to prevent TDS rather than reclaim it. If your total income for the year will be below the taxable limit, you can tell the bank not to deduct at all by filing a self-declaration.

Until now this meant Form 15G for those under 60 and Form 15H for senior citizens, submitted to each bank separately at the start of every financial year. From FY 2026-27, the government has merged both into a single Form 121, notified by the CBDT in late March 2026 under the new Income Tax Act framework. One form now covers all ages. PAN is mandatory; submit Form 121 without a valid PAN and it is treated as invalid, which lets the bank deduct at 20%.

The eligibility rule is strict and unchanged: you can only file it if your estimated tax for the year is nil. File it casually when you do owe tax and you are signing a false declaration, so use it only when you are genuinely below the threshold.

The exact steps to claim your refund

For every other case, the refund route runs through your income tax return. Here is the sequence that works.

1. Pull your Form 26AS and AIS. Log in to the income tax e-filing portal and open Form 26AS (your TDS/TCS ledger) and the Annual Information Statement (AIS), which lists interest, rent and other transactions reported against your PAN. Every rupee of TDS you want to claim must appear in Form 26AS first.
2. Reconcile against your own records. Match the figures with your Form 16 from the employer, your bank's interest certificate and your Form 16C if you received rent. If a deduction is missing, chase the deductor (employer, bank or tenant) to correct their TDS return, because you cannot claim credit the department cannot see.
3. Report all income, then claim the credit. File the correct ITR for your case. Declare the full income, including FD interest in 'Income from Other Sources', and enter the TDS in the tax-paid schedule. The portal usually pre-fills this from 26AS, but verify it line by line.
4. Enter the right bank account. Refunds are paid only to a pre-validated bank account linked to your PAN. Validate it on the portal before you file.
5. e-Verify within the deadline. A return is not processed until verified. Use Aadhaar OTP, net banking or the other approved methods. The 30-day verification clock starts the day you file.

Once processed, the excess is credited straight to your account. If the department is slow, Section 244A entitles you to interest of 0.5% a month (about 6% a year) on the refund, though no interest is paid where the refund is under 10% of the tax assessed.

Dates and small print worth remembering

Timing decides whether this is painless or costly. For AY 2026-27 (income earned in FY 2025-26), the due date is 31 July 2026 for most salaried filers using ITR-1 or ITR-2, and 31 August 2026 for those on ITR-3 or ITR-4. Miss it and you can still file a belated return until 31 December 2026, but you forfeit some benefits and may pay a late fee.

A few habits save real money. Keep your PAN updated with every bank to avoid the 20% rate. Don't wait for Form 16 if your only issue is FD TDS; the interest certificate and 26AS are enough. And check the AIS even if you think your taxes are simple, because a single unreported FD or a tenant's TDS entry can hold up your entire refund. The system is built to give your money back. It just refuses to do it until you file.