New Tax Reporting Requirements for NBFC and HFC Fixed Deposit Interest in India
ITR Filing 2026: NBFC, HFC fixed deposit interest must now be declared under schedule OS — Here's what changed
Mint
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Indian investors earning interest from Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) in FY 2025-26 must now report this income under a newly defined section in their income tax returns. The updated ITR forms for Assessment Year 2026-27 explicitly require this disclosure by the 31 July 2026 deadline.
- 01Investors must declare interest income from NBFCs and HFCs in their tax returns.
- 02New ITR forms for AY 2026-27 include a specific field for this income.
- 03Interest from these sources is taxed at the investor's applicable income tax slab rate.
- 04The deadline for filing returns is 31 July 2026.
- 05Late filing incurs fees and interest on outstanding tax dues.
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For the financial year 2025-26, lakhs of Indian investors will need to declare interest income earned from Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) in their income tax returns. The Income Tax Department has updated the ITR forms for Assessment Year 2026-27, specifically requiring this income to be reported under the 'Others' column of Schedule OS. This change eliminates previous ambiguities where taxpayers had to decide where to report such income. Schedule OS now includes various income sources, such as dividends and interest from savings accounts, alongside the newly added requirement for NBFC and HFC interest income. This income will be taxed at the investor's applicable income tax slab rate, meaning a taxpayer in the 30% slab will pay 30% tax on this interest. The deadline for filing these returns is set for 31 July 2026, and late submissions may incur a fee of up to ₹5,000 (roughly $60 USD) along with interest on any outstanding tax dues.
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This change will affect many individual investors in India who hold fixed deposits with NBFCs and HFCs, requiring them to be more diligent in their tax reporting.
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