Interest Income Tax — FD, Savings Account & Deductions Explained

Updated: 3 June 2026

Interest income from bank savings accounts, FDs, RDs, NSC, and post office deposits is fully taxable under "Income from Other Sources" at your applicable income tax slab rate. Section 80TTA provides a ₹10,000 deduction on savings account interest for individuals below 60 (old regime only). Section 80TTB provides a higher ₹50,000 deduction for senior citizens (60+) on all bank and post office interest — also old regime only. In the new tax regime, all interest income is taxable with no deductions.

₹50,000 Section 80TTB deduction for senior citizens (60+) on all bank/post office interest — old tax regime only

Tax Treatment of Interest from Different Sources

Interest Source	Taxability	TDS Threshold	Special Exemption
Bank Savings Account	Taxable at slab rate	No TDS	80TTA: ₹10K (below 60, old regime)
Bank Fixed Deposit (FD)	Fully taxable at slab rate	10% TDS if >₹40K/year (₹50K for seniors)	80TTB: ₹50K for seniors (old regime)
Bank Recurring Deposit (RD)	Fully taxable at slab rate	10% TDS if >₹40K/year	80TTB: ₹50K for seniors (old regime)
Post Office Savings Account	Taxable; ₹3,500/₹7,000 exempt [Sec 10(15)(i)]	No TDS	80TTA/80TTB in old regime
Post Office FD / RD / MIS / TD	Fully taxable at slab rate	No TDS by post office	80TTB: ₹50K for seniors (old regime)
NSC (National Savings Certificate)	Annual accrued interest taxable; reinvested as 80C in years 1–4	No TDS	80C deduction on reinvested interest (old regime)
P2P Lending Platforms	Fully taxable at slab rate	10% TDS by platform	No exemption

Section 80TTA vs Section 80TTB

Feature	Section 80TTA	Section 80TTB
Who can claim	Individuals below 60 years; HUF	Senior citizens (60 years and above)
Interest covered	Savings account interest only (banks, co-op banks, post offices)	ALL interest — savings, FD, RD, post office deposits
Maximum deduction	₹10,000 per year	₹50,000 per year
Tax regime	Old regime only	Old regime only
FD interest covered?	No	Yes
HUF eligible?	Yes	No (only resident senior citizen individuals)

Frequently Asked Questions

Is FD (Fixed Deposit) interest taxable in India?

Yes, FD interest is fully taxable. It is added to your total income and taxed at your applicable slab rate under "Income from Other Sources." There is no basic exemption for FD interest. However, bank/NBFC deducts TDS at 10% if total FD interest exceeds ₹40,000 in a year (₹50,000 for senior citizens). If your total income is below the exemption limit, submit Form 15G/15H to avoid TDS deduction.

Is savings account interest exempt from tax?

Not fully, but Section 80TTA gives you a deduction of up to ₹10,000 per year on savings account interest if you are below 60 years of age (old regime only). This covers savings accounts with banks, co-operative banks, and post offices. Interest beyond ₹10,000 is taxable. Senior citizens (60+) should use Section 80TTB instead, which allows ₹50,000 deduction on ALL bank/post office interest.

Is Section 80TTA available under the new tax regime?

No. Section 80TTA (₹10,000 deduction on savings interest) and Section 80TTB (₹50,000 deduction for senior citizens) are not available under the new tax regime. Under the new regime, the entire interest income from savings accounts, FDs, RDs, and post office deposits is taxable at slab rate with no deductions allowed.

How do I report interest income in my ITR?

Report all interest income under "Income from Other Sources" (Schedule OS) in your ITR. Include interest from: savings accounts, FDs, RDs, NSC (annual accrued interest), post office savings, PPF (taxable only if prematurely closed), P2P lending, etc. Cross-check with your AIS (Annual Information Statement) in the income tax portal to ensure all bank-reported interest is captured.

Is post office savings account interest taxable?

Post office savings account interest up to ₹3,500 (individual account) or ₹7,000 (joint account) per year is exempt under Section 10(15)(i). This exemption is available in BOTH old and new tax regimes. Interest above these limits is taxable. Post office FD/RD interest has no such exemption — it is fully taxable (with Section 80TTB deduction available for senior citizens in old regime).

Interest Income Tax Near You

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