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

[CosmicCat]

This incident happened with my dad back in Jan '25. My dad holds a couple of Senior Citizen Savings Scheme (SCSS) deposits at SBI. Like every year, he also submitted the Form 15H online for all his SCSS deposits in the beginning of the financial year (April '24).

Back in October '24, he opened an FD of ₹50,000 with a tenure of 3 months. It was his first and the only FD held during that financial year with SBI. Since the principal amount and the tenure was short, he didn't bother to file Form 15H for it.

He was expected to earn an interest of ₹699 upon its maturity on 1st Jan '25. But when it was matured, he was stunned to notice that instead of crediting ₹50,699 into his savings account, they credited ₹45,729 only! So, they essentially deducted around ₹5,000 from the principal amount!

When I looked at the FD's statement, I was stunned to see the following transactions:


While deducting a TDS of ₹70, which is 10% of 699 (The interest amount upon maturity), stands justified, but why would they debit ₹4,900 more as "Tax on Previous Interest" when the Form 15H for all other deposits were already submitted beforehand?

He raised a complaint at their CMS portal the same day, and got the following response from the bank:
"Customer is advised that TDS is deducted from term deposit accounts at the time of interest payout or on 31st March if interest paid + accrued for all term deposit accounts at CIF level exceeds threshold limit. Tax on previous interest is deducted to compensate the less TDS deduction at CIF level in a particular FY. On 01.01.2025, threshold limit was crossed. Tax on previous interest is deducted from account which comes first for interest payout which may result in dipping of principal amount. Team SBI."

This makes no sense at all! He even coordinated with the Branch Manager various times, but they were helpless and provided no solution.

Even the TRACES portal shows no trace of this TDS deduction (Perhaps since they haven't submitted the details of the TDS for the Jan-Mar '25 quarter yet.)

He raised no complaints thereafter. So, I need you guys' opinion about what I should do next:

1. Should I raise it to the Nodal Office and thereafter to RBI Ombudsman if unsatisfied and demand a hefty compensation?
2. Or just be patient, and get the TDS refunded back after filing the ITR (Which he shall do in June/July)?
3. Or anything else?

Thanks in anticipation.

 

[Dreams Of Desire 💓]

ask for details of "previous interest" they paid for the FY.
Get the details and escalate. As there is time before itr submission

 

[CosmicCat]

ask for details of "previous interest" they paid for the FY.
Get the details and escalate. As there is time before itr submission

Those incompetent folks at branch denied to provide details on it.

Also, as per my dad's calculations, the TDS can't be anywhere close to ₹4900 on the interest earned on his SCSS deposits for the whole financial year. So, I'll definitely ask him to escalate this case to the Nodal Office (General Manager — Customer Service). It's been only three months, so hopefully there's still a chance.

 

[IDontThinkSo]

Yep, you should escalate to nodal office as branch and BM are unable to help you and resolve this.

Ask for bifurcation on how they reached this amount as CRM/first level will only send template replies without much help.

Move to RBI if they are unable to provide resolution.

 

[sadhunath]

claim refund at ITR filing/

Also, IMO, you can get interest certificates from netbanking portal.

 

[Arnal07]

following . .

 

[CosmicCat]

following . .

Keep following. I will keep this thread updated. 👍

 

[Trust Me]

Back in October '24, he opened an FD of ₹50,000 with a tenure of 3 months. It was his first and the only FD held during that financial year with SBI.

He raised a complaint at their CMS portal the same day, and got the following response from the bank:
"Customer is advised that TDS is deducted from term deposit accounts at the time of interest payout or on 31st March if interest paid + accrued for all term deposit accounts at CIF level exceeds threshold limit. Tax on previous interest is deducted to compensate the less TDS deduction at CIF level in a particular FY. On 01.01.2025, threshold limit was crossed. Tax on previous interest is deducted from account which comes first for interest payout which may result in dipping of principal amount. Team SBI."

If the highlighted statement above from SBI is true, there is 5k TDS right there (10% of the 50k threshold).

Also, as per my dad's calculations, the TDS can't be anywhere close to ₹4900 on the interest earned on his SCSS deposits for the whole financial year.

This claim is clearly inconsistent with SBI's claim above. This suggests that the SCSS amount is much less than Rs. 6 lakhs (based on the current rate of 8.2%).

So the thing to do is download the interest certificate for the FY from SBI, and fight with them on that basis.
.

 

[RAMESH BABU N]

Looking at practical point of view,
Once TDS is deducted, it goes automatically to ITD. No one can stop it midway.
The only option is to file ITR and claim refund.

 

[Beyond]

claim refund at ITR filing/

Also, IMO, you can get interest certificates from netbanking portal.

You don't need to do anything beyond that ☝

 

[hender]

This incident happened with my dad back in Jan '25. My dad holds a couple of Senior Citizen Savings Scheme (SCSS) deposits at SBI. Like every year, he also submitted the Form 15H online for all his SCSS deposits in the beginning of the financial year (April '24).

Back in October '24, he opened an FD of ₹50,000 with a tenure of 3 months. It was his first and the only FD held during that financial year with SBI. Since the principal amount and the tenure was short, he didn't bother to file Form 15H for it.

He was expected to earn an interest of ₹699 upon its maturity on 1st Jan '25. But when it was matured, he was stunned to notice that instead of crediting ₹50,699 into his savings account, they credited ₹45,729 only! So, they essentially deducted around ₹5,000 from the principal amount!

When I looked at the FD's statement, I was stunned to see the following transactions:
View attachment 89398

While deducting a TDS of ₹70, which is 10% of 699 (The interest amount upon maturity), stands justified, but why would they debit ₹4,900 more as "Tax on Previous Interest" when the Form 15H for all other deposits were already submitted beforehand?

He raised a complaint at their CMS portal the same day, and got the following response from the bank:
"Customer is advised that TDS is deducted from term deposit accounts at the time of interest payout or on 31st March if interest paid + accrued for all term deposit accounts at CIF level exceeds threshold limit. Tax on previous interest is deducted to compensate the less TDS deduction at CIF level in a particular FY. On 01.01.2025, threshold limit was crossed. Tax on previous interest is deducted from account which comes first for interest payout which may result in dipping of principal amount. Team SBI."

This makes no sense at all! He even coordinated with the Branch Manager various times, but they were helpless and provided no solution.

Even the TRACES portal shows no trace of this TDS deduction (Perhaps since they haven't submitted the details of the TDS for the Jan-Mar '25 quarter yet.)

He raised no complaints thereafter. So, I need you guys' opinion about what I should do next:

1. Should I raise it to the Nodal Office and thereafter to RBI Ombudsman if unsatisfied and demand a hefty compensation?
2. Or just be patient, and get the TDS refunded back after filing the ITR (Which he shall do in June/July)?
3. Or anything else?

Thanks in anticipation.

Do your dad need to pay any Direct Taxes to Govt arise out of the total income earned in the FY ?

 

[RAMESH BABU N]

Giving 15H is no guarantee that TDS will not be deducted. Please READ the relevant undertakings printed on that 15H. So, notwithstanding whether one gives it not, if it qualifies for TDS, it will be deducted.

The only choice is to file ITR and get a REFUND.

 

[CosmicCat]

If the highlighted statement above from SBI is true, there is 5k TDS right there (10% of the 50k threshold).


This claim is clearly inconsistent with SBI's claim above. This suggests that the SCSS amount is much less than Rs. 6 lakhs (based on the current rate of 8.2%)

My dad has had few SCSS deposits with 8.4% interest rate (or 8.2%, can't recall), and few at 7.6%, which were in the extension period (beyond five years.) And, no, the Total Principal Amount is much more than ₹6L (Can't disclose the exact amount here). But that's not the point here.

The point is, Fixed Deposits are made with specific financial goals in mind, and such unauthorized deductions from the Principal Amount undermine trust and financial security, especially when no prior communication or policy was communicated to you beforehand. This deduction from the Principal Amount not only defies logic, but also violates the fundamental principles governing Fixed Deposits, wherein the principal amount must be sacrosanct upon maturity, and should not be tampered with under any circumstances.

Moreover, they also haven't specifically mentioned the bifurcation of how they have computed the "Tax on Previous Interest" amounting ₹4,900. I can't find such policy on their website either.

I hope they would upload these TDS details for the ₹4,900 amount in Form 16. However, since it has caused my dad enough mental distress and loss in trust on them (He has been their customer for over 30 years), he has decided to take up a fight.

So the thing to do is download the interest certificate for the FY from SBI, and fight with them on that basis.

Yes, I know. Been awaiting for them to upload the Interest Certificate for FY 2024-25 on netbanking. As I recall, in the last two years, they uploaded it around the mid of April.

Looking at practical point of view,
Once TDS is deducted, it goes automatically to ITD. No one can stop it midway.
The only option is to file ITR and claim refund

I do agree with you, however the point is, the bank unethically deducted amount from the principal amount without any prior communication or reference to their policy. Moreover, they haven't even provided bifurcation of how they computed the so-called "Tax on Previous Interest" amounting to Rs. 4,900.

Furthermore, I don't think banks "immediately" submit the TDS details to the Income Tax Department. Have had such issue happened recently with ICICI Bank as described here. The mistake was at bank's end, and so they rightfully reversed the TDS charges.

Do your dad need to pay any Direct Taxes to Govt arise out of the total income earned in the FY ?

If you're referring to any sort of tax liability, then no. As I recall, for the past 7 years, ever since he retired, he has had no tax liability and his overall income falls under the exemption limit defined in Form 15G/H's policy, which is why he submits Form 15G/H every year.

 

[Talkwithfino]

The point is, Fixed Deposits are made with specific financial goals in mind, and such unauthorized deductions from the Principal Amount undermine trust and financial security, especially when no prior communication or policy was communicated to you beforehand.

However, since it has caused my dad enough mental distress and loss in trust on them (He has been their customer for over 30 years), he decided to take up a fight.

Very True!
Top all over, Filing ITR and then claiming refund takes more time than usual.

following this thread to see the final outcome.
All the Best

 

[hender]

My dad has had few SCSS deposits with 8.4% interest rate (or 8.2%, can't recall), and few at 7.6%, which were in the extension period (beyond five years.) And, no, the amount is much more than ₹6L (Can't disclose the exact amount here). But that's not the point here here.

The point is, Fixed Deposits are made with specific financial goals in mind, and such unauthorized deductions from the Principal Amount undermine trust and financial security, especially when no prior communication or policy was communicated to you beforehand. This deduction from the Principal Amount not only defies logic, but also violates the fundamental principles governing Fixed Deposits, wherein the principal amount must be sacrosanct upon maturity, and should not be tampered with under any circumstances.

Moreover, they also haven't specifically mentioned the bifurcation of how they have computed the "Tax on Previous Interest" amounting ₹4,900. I can't find such policy on their website either.

I hope they would upload these TDS details for the ₹4,900 amount in Form 16. However, since it has caused my dad enough mental distress and loss in trust on them (He has been their customer for over 30 years), he decided to take up a fight.


Yes, I know. Been awaiting for them to upload the Interest Certificate for FY 2024-25 on netbanking. As I recall, in the last two years, they uploaded it around the mid of April.


I do agree with you, however the point is, the bank unethically deducted amount from the principal amount without any prior communication or reference to their policy. Moreover, they haven't even provided bifurcation of how they computed the so-called "Tax on Previous Interest" amounting to Rs. 4,900.

Furthermore, I don't think banks "immediately" submit the TDS details to the Income Tax Department. Have had such issue happened recently with ICICI Bank as described here. The mistake was at bank's end, and so they rightfully reversed the TDS charges.


If you're referring to any sort of tax liability, then no. As I recall, for the past 7 years, ever since he retired, he has had no tax liability, which is why he submits Form 15G/H every year.

Got your point and your Pain☝️ + no Tax Liability, so no use case of TDS adjustment, except claiming in ITR.

You can fight for injustice, discomfort and breach of trust.
All the best 👍

Keep in mind, Frequent and irrational behaviour/response(Counter Party) in the Journey.

 

[Trust Me]

My dad has had few SCSS deposits with 8.4% interest rate (or 8.2%, can't recall), and few at 7.6%, which were in the extension period (beyond five years.) And, no, the Total Principal Amount is much more than ₹6L (Can't disclose the exact amount here). But that's not the point here.

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).

The point is, .... This deduction from the Principal Amount not only defies logic, but also violates the fundamental principles governing Fixed Deposits, wherein the principal amount muste sacrosanct upon maturity, and should not betampered with under any circumstances.

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)?

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. You can ask the bank to get this policy in writing, if you so wish, but the deduction was not wrongful. If the tax was actually not payable, ask for a refund by filing the ITR.

Been awaiting for them to upload the Interest Certificate for FY 2024-25 on netbanking. As I recall, in the last two years, they uploaded it around the mid of April.

There is in fact no need to even wait for that, -- just find the appropriate figures from the relevant statements and reconcile.
.

 

[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).


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)?

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. You can ask the bank to get this policy in writing, if you so wish, but the deduction was not wrongful. If the tax was actually not payable, ask for a refund by filing the ITR.



There is in fact no need to even wait for that, -- just find the appropriate figures from the relevant statements and reconcile.
.

Bla bla bla bla bla bla

 

[Trust Me]

Bla bla bla bla bla bla

Oh, ... Grow up!
.

 

[hender]

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).


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)?

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. You can ask the bank to get this policy in writing, if you so wish, but the deduction was not wrongful. If the tax was actually not payable, ask for a refund by filing the ITR.



There is in fact no need to even wait for that, -- just find the appropriate figures from the relevant statements and reconcile.
.

View Point ☝️ what I got from OP and subsequent post about discomfort and displeasure on TDS on FD, by deduction of Principal.
@CosmicCat , Only Can confirm this.

 

[KGSIPO]

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.