PlanivestFin
Tax Planning

How to Report Bajaj Finance, PNB Housing, and NBFC Interest Income in ITR 2026 — Schedule OS Guide

May 03, 2026•11 min read•PlanivestFin Research Team

TL;DR

  • CBDT Notification No. 57/2026 requires separate reporting of NBFC and HFC interest income under Schedule OS for AY 2026-27 — the old "Others" bucket is no longer sufficient
  • Bajaj Finance, Mahindra Finance, Muthoot Finance, L&T Finance are NBFCs — not banks
  • PNB Housing Finance, LIC Housing Finance, Can Fin Homes are HFCs — also not banks
  • Always report gross interest (before TDS), not the amount received after deduction
  • Missing NBFC interest in your return while it shows in AIS triggers Section 270A penalty — 50% of tax on underreported amount
  • Below the TDS threshold does not mean below the tax threshold — report even if no TDS was deducted

Bajaj Finance FD Showing in AIS? Do Not Put It Under "Others"

You opened your AIS before filing your ITR. Under the interest section, you expected to see only bank FD interest. Instead, there is a separate entry from Bajaj Finance, Mahindra Finance, PNB Housing Finance, or LIC Housing Finance.

Now the confusion starts. Is this bank interest? Does it go under "Income from Other Sources"? Should TDS be entered separately? What if the AIS shows a different amount than your interest certificate?

Until AY 2025-26, most salaried taxpayers solved this by lumping everything into a broad "Others" category in Schedule OS. Imprecise, but the system let it pass.

For AY 2026-27, that shortcut is gone. CBDT Notification No. 57/2026 dated April 9, 2026 notified the revised ITR forms, and Livemint specifically reported that interest earned from NBFCs and HFCs must now be reported separately under Schedule OS. The reason is simple: AIS already receives real-time data from these companies linked to your PAN. If your return lumps NBFC interest into a generic category but AIS shows a specific entry from Bajaj Finance, the system flags a mismatch.

This guide explains where to put it, how to match it with AIS, and what the consequences are if you get it wrong.

What Changed in ITR 2026 and Why It Matters

The old Schedule OS structure allowed taxpayers to report all non-salary interest in one undifferentiated block — bank FD, savings account, NBFC deposit, HFC deposit, corporate bonds, all together. The tax calculation was often correct even with this grouping, but the classification was imprecise.

The new structure for AY 2026-27 requires a three-way breakdown:

  • Interest from Banks and Post Offices
  • Interest from NBFCs and HFCs
  • Interest from Other Corporate Bonds and Debentures

This matters because AIS now receives data directly from deductors and financial entities. If you earned ₹35,000 from a Bajaj Finance FD and ₹20,000 from SBI, your AIS shows two separate entries from two separate entities. Reporting a combined ₹55,000 under a generic category creates a mismatch that the system — and increasingly, human scrutiny — will flag.

The goal is not to increase your tax. The goal is to classify your income the way the government's data systems already see it.

NBFC vs HFC vs Bank — Getting the Classification Right

This is where most salaried taxpayers make mistakes. Getting the entity type wrong means putting income in the wrong sub-category, which is exactly what the new rules are designed to prevent.

Banks are institutions with a full banking licence from RBI. Common examples: State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Yes Bank, Bank of Baroda, Canara Bank, Punjab National Bank. If your interest came from a bank FD, recurring deposit, or savings account, report it under the bank and post office interest category in Schedule OS.

NBFCs — Non-Banking Financial Companies — provide financial services without a full banking licence. Common examples: Bajaj Finance, Mahindra Finance, Muthoot Finance, L&T Finance, Tata Capital, Shriram Finance. A practical test: if you placed money in a "company fixed deposit" or "corporate FD" with a non-bank entity, it is almost certainly NBFC interest.

HFCs — Housing Finance Companies — are a subset of NBFCs focused on home loans and housing deposits. Common examples: PNB Housing Finance, LIC Housing Finance, Can Fin Homes, Aavas Financiers. Do not confuse PNB Housing Finance with Punjab National Bank — they are completely different entities. One is a bank, one is an HFC.

Special case — old HDFC Ltd deposits: HDFC Ltd was a housing finance company before its merger with HDFC Bank. If you held deposits with HDFC Ltd before the merger and your AIS still shows interest under the HDFC Ltd entity, do not automatically treat it as HDFC Bank interest. Check the deductor name and TAN in your AIS and Form 16A. If the interest relates to the old HDFC Ltd HFC entity, report it under NBFC/HFC — not ordinary bank interest.

When in doubt: match the AIS entry rather than relying on the brand name. The company name in AIS tells you the entity type.

Where to Report It in ITR-1

Most salaried employees with income below ₹50 lakh, no capital gains, and no business income use ITR-1.

Step 1: Start with AIS, not the ITR form. Log into incometax.gov.in and open your Annual Information Statement. Under the "Interest" section, look for non-bank names — Bajaj Finance Ltd, Mahindra and Mahindra Financial Services, PNB Housing Finance, LIC Housing Finance, Muthoot Finance. Note the gross interest amount against each entity. Gross means before TDS was deducted. If Bajaj Finance credited ₹35,000 interest and deducted ₹3,500 TDS, your gross is ₹35,000 — that is what you report.

Step 2: Match AIS with Form 16A. For interest income from NBFCs and HFCs, the TDS certificate is Form 16A — not Form 16, which is for salary. Verify that the gross amount in AIS matches your Form 16A and interest certificate from the company. Small timing differences are common. Large mismatches should not be ignored — resolve them before filing.

Step 3: Go to Schedule OS in ITR-1. Navigate to Income from Other Sources. Under the interest income section, the revised structure for AY 2026-27 includes a sub-category for NBFC/HFC/corporate deposit interest. The exact label may vary between portal releases — focus on the principle: do not put NBFC or HFC interest into the bank interest field. Use the dedicated field for company or corporate deposit interest.

Step 4: Enter gross interest, not net. Example: SBI FD interest ₹12,000, Bajaj Finance FD interest ₹28,000, PNB Housing deposit interest ₹15,000. Enter bank interest ₹12,000 in the bank category. Enter ₹43,000 in the NBFC/HFC/corporate deposit category. Total Schedule OS interest income: ₹55,000.

Step 5: Verify TDS credit. After entering income amounts, go to the TDS section and confirm that TDS deducted by the NBFC or HFC appears correctly — check the deductor name, TAN, gross amount, and TDS amount against Form 16A and Form 26AS. If TDS does not appear in Form 26AS, raise it with the NBFC before filing. Filing without the TDS credit appearing in 26AS means you will not receive credit for it automatically.

Where to Report It in ITR-2

You need ITR-2 if you have capital gains from stocks or mutual funds, income above ₹50 lakh, more than two house properties, or foreign assets.

In ITR-2, the structure is more detailed but the principle is identical.

Open Schedule OS — Income from Other Sources. Locate Point 1(a) — Interest Income. For AY 2026-27, Point 1(a) has been expanded into sub-rows. Sub-row 1(a)(ii) specifically captures NBFC and HFC interest. Enter your Bajaj Finance, PNB Housing Finance, or LIC Housing Finance interest there. Since live utility labels can vary between portal versions, verify the exact row name before filing — but the intent is clear: NBFC/HFC interest has its own row, separate from bank interest.

The most common ITR-2 error: entering income in Schedule OS correctly but forgetting to match TDS in Schedule TDS. If Schedule OS shows ₹35,000 interest from Bajaj Finance but Schedule TDS does not show Bajaj Finance's TAN and TDS amount, the system may not grant you the TDS credit automatically. Cross-check both schedules before submitting.

TDS on NBFC and HFC Interest — What You Need to Know

TDS on interest from NBFCs and HFCs is governed by Section 194A — the same section that covers TDS on bank FD interest. The broad TDS rate is 10% when PAN is provided and 20% when PAN is not furnished.

The TDS threshold for NBFCs in "other cases" category is ₹5,000 per year per payer. This means if your Bajaj Finance interest is ₹3,800 for the year, Bajaj Finance may not deduct TDS. But — and this is a critical distinction — no TDS deduction does not mean the income is not taxable. You still report ₹3,800 as income from other sources in Schedule OS.

For Form 16A: unlike salary where your employer issues Form 16, for NBFC and HFC interest the deductor issues Form 16A. Download this from the TRACES portal or request it from the company. Always verify the TDS amount in Form 16A against Form 26AS before filing.

Form 15G and Form 15H: if your total income is below the taxable limit, you can submit Form 15G (below 60 years) or Form 15H (60 and above) to the NBFC or HFC at the start of the financial year to avoid TDS deduction. This form must be submitted at the beginning of FY 2025-26 — you cannot apply it retroactively for interest already credited. If TDS has already been deducted for FY 2025-26, claim the TDS credit in your return and receive a refund if your total tax liability is lower.

What Happens If You Get It Wrong

There are three scenarios with very different consequences.

Scenario 1 — wrong category, correct total tax. You reported NBFC interest in the generic "Others" category instead of the NBFC/HFC sub-category, but the total income and tax are correct. This is the most common situation. It can trigger a defective return notice under Section 139(9) because the classification does not match AIS data. If it does, you will be given time to correct and refile. Responding promptly to Section 139(9) notices converts the situation back to a routine correction. Ignoring the notice is what makes it worse.

Scenario 2 — interest not reported at all. Your AIS shows ₹38,000 interest from PNB Housing Finance but you did not include it in your return. This is underreporting. Section 270A applies — penalty of 50% of the tax payable on the underreported amount. If you are in the 30% bracket and the tax on ₹38,000 is ₹11,400, the penalty is ₹5,700 in addition to paying the tax itself.

Scenario 3 — intentional omission. If the department determines the omission was deliberate, it can be treated as misreporting under Section 270A with a penalty of 200% of tax on the misreported amount. For salaried taxpayers with AIS data clearly showing NBFC interest linked to their PAN, claiming ignorance after a notice is a difficult position to sustain.

The practical takeaway: misclassifying is a fixable error. Omitting is not.

How to Check AIS Before Filing

This step takes 20 minutes and prevents most of the problems above.

Log into incometax.gov.in and go to Services → Annual Information Statement. Download or view your AIS. Under the "Interest" section, examine every entry — not just banks. Look for company names like Bajaj Finance, Mahindra Finance, PNB Housing Finance, LIC Housing Finance, Muthoot Finance, Tata Capital, Shriram Finance, or any other non-bank financial entity.

For each non-bank entry: note the gross interest amount, note the entity name, verify against your interest certificate or account statement.

If an AIS entry is wrong — duplicate, wrong amount, or belongs to another PAN — submit feedback in the AIS portal before filing. Select the specific entry, choose the feedback reason (Information is not correct, or Information relates to another PAN), and submit. Do not file while an unresolved AIS dispute is open. Either wait for the correction or document the dispute clearly in your return.

A Worked Example

You are a salaried employee with:

  • Salary income: ₹14,00,000
  • SBI savings account interest: ₹6,000
  • SBI FD interest: ₹20,000
  • Bajaj Finance FD interest: ₹35,000 (TDS deducted: ₹3,500 by Bajaj Finance)
  • PNB Housing Finance deposit interest: ₹18,000 (TDS deducted: ₹1,800)

In Schedule OS you report:

  • Bank and post office interest: ₹26,000 (SBI savings ₹6,000 + SBI FD ₹20,000)
  • NBFC/HFC/corporate deposit interest: ₹53,000 (Bajaj Finance ₹35,000 + PNB Housing ₹18,000)

In Schedule TDS you verify:

  • Bajaj Finance TAN, gross ₹35,000, TDS ₹3,500 — matches Form 16A
  • PNB Housing Finance TAN, gross ₹18,000, TDS ₹1,800 — matches Form 16A

Total other sources income: ₹79,000

This is the correct approach. AIS shows the same entities with the same gross amounts. No mismatch.

Use the Salary Calculator Before Filing

Interest income from NBFC and HFC deposits gets added to your total income alongside salary. This can push you into a higher slab or reduce your refund amount more than expected.

Before filing, use the PlanivestFin Salary Calculator to enter your total income including interest income from all sources — bank, NBFC, HFC — and compare your tax under Old and New Regime with the actual numbers. This is especially useful if you have both HRA claims and NBFC interest income, since the combined effect on tax liability is not always obvious.

The ITR Filing 2026-27 guide covers the complete checklist including AIS reconciliation, Form 16 vs 26AS comparison, and the July 31 deadline for salaried employees.

Frequently Asked Questions

My AIS shows Bajaj Finance interest — which sub-category in ITR-1?

Use the Schedule OS field for NBFC/HFC/company or corporate deposit interest. Bajaj Finance is an NBFC, not a bank. Do not put it in the bank interest field.

I already filed using "Others" — do I need to revise?

If your total income and tax are correct but the classification is wrong, wait to see whether the return is processed or flagged. If the portal allows revision and the misclassification is material, revise the return. If you receive a defective return notice, respond within the deadline given. If the amount is significant, speak to a CA before revising.

Where do I report old HDFC Ltd deposit interest after the HDFC merger?

Check your AIS and Form 16A. If the interest entry shows HDFC Ltd (the old housing finance company), report it under NBFC/HFC/company deposit interest — not ordinary bank FD interest. Match the AIS entity name and TAN rather than assuming it is HDFC Bank interest.

What if my NBFC interest is below ₹5,000 — still report it?

Yes. The TDS threshold only decides whether the company deducts tax at source. The income is still taxable if it is below the threshold. No TDS does not mean no tax. Report the full gross interest even if you received it without any TDS deduction.

I have both bank FD and NBFC FD interest — how do I split it?

Bank FD interest (SBI, HDFC Bank, ICICI Bank) goes under the bank and post office interest sub-category. Bajaj Finance, Mahindra Finance, PNB Housing Finance, LIC Housing Finance interest goes under the NBFC/HFC/corporate deposit sub-category. Report each entity's gross interest separately and verify both against AIS and Form 26AS before submitting.

Last reviewed: May 2026 — PlanivestFin Research Team

Disclaimer: This article is for informational purposes only and does not constitute tax advice. ITR form layouts and field names may vary between portal versions. Always verify current form requirements at incometax.gov.in before filing. Consult a chartered accountant if your situation involves multiple income sources or complex interest income.