It depends. There are a number of factors that are considered here.
If you earn interest income in India, the bank or financial institution may deduct TDS before crediting the interest to your account. This ensures that taxes are collected in advance rather than at a later stage.
In your case, TDS was deducted from your interest income in India, which is why you have $1,000 deducted before you receive the remaining amount. You can later claim a refund for any excess TDS if your actual Indian tax liability is lower. My suggestion is for you to claim a refund on your India tax return if the excess amount is greater than the tax liability on the same income.
This is analogous to making an estimated tax payment. If the payment is excessive, you may claim the excess back as a refund on your tax return if the Indian tax code allows it.
Since i suggest filing for a refund on the TDS, erase the $1000 amount reported in the Foreign Tax Credit and report actual taxes you ended up paying for in India. If weren't able to claim the full amount of the credit this year, the excess amount may be carried back one year and then carried forward 10 years.
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