Tax on FD Interest India — TDS, Form 15G & Senior Citizen Rules (FY 2025-26)

Q: How is FD interest taxed in India for FY 2025-26?

Fixed deposit (FD) interest income is fully taxable under the head "Income from Other Sources" in India. There is no special tax rate — the interest is simply added to your total income and taxed at your applicable income tax slab rate. For example, if you are in the 30% slab, your FD interest is effectively taxed at 30% (plus 4% cess = 31.2%). Unlike equity LTCG, there is no concessional rate or exemption for FD interest income. Interest accrues on an annual basis even if the FD has not matured, and must be reported in the ITR for each financial year on an accrual basis.

Q: When is TDS deducted on FD interest?

Banks deduct TDS at 10% on FD interest when the total interest credited from a single bank (all branches combined, if PAN is quoted) exceeds ₹40,000 in a financial year (₹50,000 for senior citizens aged 60 and above). If you have not furnished your PAN to the bank, TDS is deducted at 20%. TDS is deducted when interest is credited to your account (not necessarily when the FD matures). The TDS certificate (Form 16A) is issued quarterly by the bank. You can view TDS details in Form 26AS and Annual Information Statement (AIS) on the income tax portal.

Q: What is Form 15G for FD interest — who should submit it?

Form 15G is a self-declaration form submitted by individuals (below 60 years) to their bank requesting that TDS not be deducted on FD interest. You can submit Form 15G only if two conditions are met: (1) your estimated total income for the financial year is below the basic tax exemption limit (₹4 lakh under new regime for FY 2025-26 after rebate considerations, or as applicable), and (2) the FD interest income itself does not exceed the basic exemption limit. Senior citizens (60 and above) must use Form 15H instead. Form 15G/15H must be submitted at the start of each financial year and at every branch or bank where FDs are held.

Q: Is tax-saving FD interest taxable even though principal gets 80C deduction?

Yes. A tax-saving FD (5-year fixed deposit) gives a deduction on the principal invested under Section 80C (up to ₹1.5 lakh), but the interest earned on the tax-saving FD is fully taxable as Income from Other Sources, just like any regular FD. The 80C deduction is only on the principal amount invested — there is no exemption on the interest. So if your FD earns ₹35,000 in interest, that ₹35,000 is added to your income and taxed at slab rate. TDS is also applicable on the interest in the same manner as a regular FD.

Updated: 3 June 2026 | Section 194A, 80TTB — Income-tax Act, 2025 | AY 2026-27

FD interest income in India is fully taxable as "Income from Other Sources" at your slab rate. Banks deduct TDS at 10% when total interest exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G (below 60 years) or Form 15H (60+) to avoid TDS if your total income is below the taxable limit. Tax-saving FD principal qualifies for 80C deduction — but its interest is still fully taxable.

₹40,000

TDS threshold on FD interest — ₹50,000 for senior citizens (60+ years)
TDS rate: 10% (if PAN provided) or 20% (if PAN not furnished). Section 194A, Income-tax Act, 2025.

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Interest accrues annually — report it every year. Even if your FD has not matured, FD interest must be reported in ITR on an accrual basis each year. Many taxpayers wrongly report FD interest only in the year of maturity — this leads to income tax notices. Check your Form 26AS and AIS for bank-reported interest data.

FD Interest Tax Calculation — At Different Slab Rates

Assume FD interest earned = ₹60,000 in FY 2025-26 (FD with SBI, PAN provided). TDS deducted by bank = 10% of ₹60,000 = ₹6,000.

Taxpayer Profile	Total Taxable Income	Slab Rate on FD Interest	Tax on ₹60K Interest	TDS Already Deducted	Net Tax Payable / Refund
Student / Low Income	Below ₹4 lakh (new regime)	0% (below slab)	₹0	₹6,000	Refund: ₹6,000
Salaried, ₹7L salary	₹7.6 lakh (after std deduction)	5–10% (new regime slabs)	~₹6,000	₹6,000	Nil / marginal
Salaried, ₹15L salary	₹15.6 lakh	15% (₹12–16L slab)	₹9,000	₹6,000	Pay: ₹3,000 more
Business professional	₹25 lakh+	30%	₹18,000	₹6,000	Pay: ₹12,000 more
Senior Citizen (60+)	₹6 lakh (old regime)	20%	₹12,000 (but 80TTB gives ₹50K deduction — interest up to ₹50K tax-free)	₹0 (Form 15H submitted)	₹0 (80TTB covers ₹50K; ₹10K × 20% = ₹2,000 slab tax applies)

TDS on FD — Rules, Form 15G/15H, and Senior Citizen Differences

Condition	Regular FD Holder (<60 yrs)	Senior Citizen (60+ yrs)
TDS threshold (annual interest)	₹40,000 per bank (all branches combined)	₹50,000 per bank
TDS rate (PAN provided)	10%	10%
TDS rate (PAN not provided)	20%	20%
Form to avoid TDS	Form 15G (conditions: total income below exemption, interest below exemption)	Form 15H (condition: estimated tax liability is nil)
Section 80TTB deduction	Not available (80TTA gives ₹10K on savings interest only)	₹50,000 deduction on all interest income (FD + savings) — old regime only
NRO FD TDS rate	30% TDS (Section 195)	30% TDS (Section 195)
NRE FD taxation	Fully exempt from Indian tax (interest not taxable in India)	Fully exempt
Tax-saving FD (5-year) principal	Qualifies for 80C deduction up to ₹1.5L (old regime)	Qualifies for 80C deduction up to ₹1.5L (old regime)
Tax-saving FD interest	Fully taxable (80C deduction is only on principal)	Fully taxable (but 80TTB may offset it)

How to Avoid Over-Deduction of TDS on FD

Always provide your PAN to the bank — reduces TDS rate from 20% to 10%
Submit Form 15G (below 60) or Form 15H (60+) at the start of each financial year at every bank branch where you have FDs
If TDS has been wrongly deducted, claim it as a credit in your ITR — it will reduce your tax payable or generate a refund
Link Aadhaar to PAN to avoid higher TDS deduction triggered by inoperative PAN
Check Form 26AS after every quarter to verify TDS actually deposited by the bank matches what was deducted

Frequently Asked Questions

How is FD interest taxed in India for FY 2025-26?

Fixed deposit (FD) interest income is fully taxable under the head "Income from Other Sources" in India. There is no special tax rate — the interest is simply added to your total income and taxed at your applicable income tax slab rate. For example, if you are in the 30% slab, your FD interest is effectively taxed at 30% (plus 4% cess = 31.2%). Unlike equity LTCG, there is no concessional rate or exemption for FD interest income. Interest accrues on an annual basis even if the FD has not matured, and must be reported in the ITR for each financial year on an accrual basis.

When is TDS deducted on FD interest?

Banks deduct TDS at 10% on FD interest when the total interest credited from a single bank (all branches combined, if PAN is quoted) exceeds ₹40,000 in a financial year (₹50,000 for senior citizens aged 60 and above). If you have not furnished your PAN to the bank, TDS is deducted at 20%. TDS is deducted when interest is credited to your account (not necessarily when the FD matures). The TDS certificate (Form 16A) is issued quarterly by the bank. You can view TDS details in Form 26AS and Annual Information Statement (AIS) on the income tax portal.

What is Form 15G for FD interest — who should submit it?

Form 15G is a self-declaration form submitted by individuals (below 60 years) to their bank requesting that TDS not be deducted on FD interest. You can submit Form 15G only if two conditions are met: (1) your estimated total income for the financial year is below the basic tax exemption limit (₹4 lakh under new regime for FY 2025-26 after rebate considerations, or as applicable), and (2) the FD interest income itself does not exceed the basic exemption limit. Senior citizens (60 and above) must use Form 15H instead. Form 15G/15H must be submitted at the start of each financial year and at every branch or bank where FDs are held.

Is tax-saving FD interest taxable even though principal gets 80C deduction?

Yes. A tax-saving FD (5-year fixed deposit) gives a deduction on the principal invested under Section 80C (up to ₹1.5 lakh), but the interest earned on the tax-saving FD is fully taxable as Income from Other Sources, just like any regular FD. The 80C deduction is only on the principal amount invested — there is no exemption on the interest. So if your FD earns ₹35,000 in interest, that ₹35,000 is added to your income and taxed at slab rate. TDS is also applicable on the interest in the same manner as a regular FD.

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