ITR filing 2026: NBFC, HFC interest income must be reported separately — what it means

Taxpayers earning interest income from Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs), and corporate fixed deposits will face tighter disclosure requirements while filing Income Tax Returns (ITR) for Assessment Year (AY) 2026–27. The Income Tax Department has revised return forms to ensure clearer reporting under Schedule OS (Income from Other Sources), reducing ambiguity and improving compliance.

Clearer categorisation

Under the updated ITR structure, interest earned from companies, NBFCs, and HFCs must now be explicitly reported under Schedule OS. Earlier, such income was not distinctly categorised, often leading to confusion among taxpayers while classifying it under “other income.” The revised format removes this ambiguity by clearly identifying these income streams.

Siddharth Maurya, Founder and Managing Director of Vibhvangal Anukulakara Private Limited, said taxpayers must now pay closer attention while reporting such income. “Taxpayers who earn fixed deposit interest from NBFCs and HFCs must report this income through Schedule OS under the new ITR filing requirements for AY 2026–27. Earlier, taxpayers reported FD interest as a combined figure, but this new requirement improves transparency and allows the Income Tax Department to match reported income with TDS data in Form 26AS and the Annual Information Statement (AIS),” he said.

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What falls under Schedule OS

Schedule OS includes income that does not fall under salary, house property, capital gains, or business income. This covers interest from savings accounts, bank and post office deposits, dividend income, interest on tax refunds, family pension, and now explicitly, interest from NBFCs, HFCs, and corporate instruments such as debentures.

Maurya added that this change increases reporting precision. “Investors must accurately report interest earned from institutions such as Bajaj Finance or LIC Housing Finance. Any missing or incorrectly disclosed income could trigger scrutiny and delay refund processing,” he said.

No change in taxation, only reporting

Importantly, there is no change in how such income is taxed. Interest earned from NBFC or HFC deposits continues to be added to total income and taxed as per the individual’s applicable slab rate. A taxpayer in the 30% bracket will continue to pay tax at 30% on this income, similar to bank fixed deposits.

The revision is focused entirely on improving reporting clarity rather than altering tax liability.

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Reconciliation is now critical

With stricter disclosure norms, taxpayers must ensure that income declared in ITR matches details available in Form 26AS and AIS. TDS deducted on such interest will already be reflected in these statements and must be reconciled carefully before filing.

“This change reinforces the government’s push toward tighter compliance, making it essential for taxpayers to reconcile all FD interest entries before filing returns,” Maurya noted.

Deadline and compliance impact

The due date for filing ITR for AY 2026–27 is July 31, 2026 for non-audit taxpayers. Missing the deadline can attract a penalty of up to ₹5,000 under Section 234F, along with applicable interest under Sections 234A, 234B, and 234C.

New ITR framework

The revised ITR framework marks a shift toward greater transparency and data matching in tax reporting. While the tax outgo remains unchanged, accurate disclosure has become critical. For investors in NBFC and HFC deposits, precise reporting under Schedule OS will be key to avoiding notices and ensuring smooth return processing.