SBI Deducted ₹5,000 From the Principal Amount Upon FD's Maturity

[CosmicCat]

I am afraid, this additional information is inconsistent with the earlier claim that:

"the TDS can't be anywhere close to ₹4900 on the interest earned on his SCSS deposits for the whole financial year."

So, quite obviously, SBI's claim was correct that:

"On 01.01.2025, threshold limit was crossed."

-- so they rightly applied TDS, starting with 5k (10% of the 50k threshold).

I already acknowledged in my original post that TDS is applicable if the CIF-level interest income exceeded the threshold (₹50,000 for senior citizens). However, that doesn’t automatically justify how SBI calculated ₹4,900 as “Tax on Previous Interest”—especially when:

• Form 15H was already filed for all SCSS deposits at the beginning of the financial year, which banks are supposed to honor unless proven invalid. The sole reason why Form 15H was submitted was, his total income—inclusive of the interest income earned from the bank—was less than the threshold limit set by the Income Tax Department's guidelines to avoid deduction of TDS, and that his tax liability was also zero for FY 2024-25.
• ₹70 was already deducted as TDS for this FD (10% of ₹699).
• No breakup or computation proof was provided for the ₹4,900 deduction.

If SBI believes that cumulative interest exceeded the exemption, they must show exact figures from each quarter, and how much TDS should have been deducted vs how much was, to justify this catch-up deduction. Guesswork or blanket statements don't cut it—especially when ₹4,900 is nearly 7x the actual interest earned on that FD.

No, the point is, you have a very strange idea about the distinction between principal and interest. When the money is paid out on maturity (I.e. not reinvested), what's the difference? The point is, whether the (total Principal + all interest payouts) is actually more or less than the total input principal (I.e. all accounts put together, -- not at each individual account level)!
Just think, where from will the bank (any bank, not just SBI) deduct the money if the still-payable interest does not cover the deductible amount (only because more interest was paid earlier than was actually payable after TDS that was not applied at that point)?

Your point makes no sense at all! Actually, there’s a very clear difference—legally and financially:

• Principal is sacrosanct in a Fixed Deposit contract. The agreement clearly states you’ll get back your entire deposited amount + interest, unless penalized for premature withdrawal.
• Deducting anything from principal at maturity, especially without clear prior disclosure or consent, undermines the terms of the FD contract. If banks start dipping into principal to settle internal calculations, it sets a dangerous precedent, especially for fixed-income senior citizens.
• TDS should always be deducted from interest, not arbitrarily from principal—unless explicitly disclosed in terms or with consent.

This must be there in every bank's policy, and is such common sense that it doesn't need to be communicated in each individual case.

Even “common sense” has to follow due process and transparency. If a shortfall exists, SBI must:

1. Notify the customer, ideally before maturity or deduction,
2. Provide a clear statement showing the deficit and calculations leading to that deduction,
3. Explain why Form 15H wasn’t honored, despite being submitted.

None of that happened here!

This is not about whether TDS is payable or not—it's about how it was handled:

• No notice,
• No computation sheet,
• No explanation for disregarding Form 15H,
• And deduction from principal without disclosure.

These aren't "minor" or "common sense" things—these are core issues of fair banking practice and customer rights.

ask for a refund by filing the ITR.

Of course we’ll claim a refund. But a refund doesn’t mean the bank gets a free pass to violate process or ethics. People deserve accountability and transparency at the source, not just a patchwork remedy later.

 

[Arnal07]

Very tricky situation, given form 15H for all deposits except one declaring that your taxable income is less than 250000. In one deposit,form 15H not given and intrest paid is crossing 50000 at CIF level. For senior citizens,no TDS will be deducted upto 50000 intrest earning.

Form 15H can be submitted when your tax liability is zero unlike form 15G which can only be submitted when total income is below the basic exemption limit.