Section 194A — TDS on
Interest Income
The TDS rate, revised Budget 2025 thresholds, Form 15G/15H, savings-account rules and non-deduction penalties for interest other than interest on securities.
Section 194A requires TDS at 10% on interest other than interest on securities — bank/post-office FD & RD interest, NBFC, company and inter-corporate interest. For FY 2025-26, TDS applies only once yearly interest crosses ₹50,000 from banks/post offices (₹1,00,000 for senior citizens) or ₹10,000 from other payers. No PAN means 20% under Section 206AA. File Form 15G / 15H to stop TDS if your income is below the taxable limit.
Section 194A — Rates & Thresholds (FY 2025-26)
The Budget 2025 thresholds took effect on 1 April 2025. TDS is deducted only when the aggregate interest for the year exceeds the limit for that payer type. See the current TDS rate chart for every section.
| Interest payer | Threshold (FY 2025-26) | With PAN | No PAN |
|---|---|---|---|
| Bank FD / RD (scheduled & co-op bank) | ₹50,000/year | 10% | 20% |
| Bank FD / RD — senior citizen (60+) | ₹1,00,000/year | 10% | 20% |
| Post-office time deposits | ₹50,000 (₹1,00,000 for 60+) | 10% | 20% |
| NBFC / company / LIC / inter-corporate | ₹10,000/year | 10% | 20% |
| Interest from firm to a partner | Excluded — no TDS | N/A | N/A |
| Interest on securities (bonds/debentures) | Under Section 193, not 194A | N/A | N/A |
General bank/post-office limit raised from ₹40,000→₹50,000 and senior-citizen limit ₹50,000→₹1,00,000 (Budget 2025); other-payer limit ₹5,000→₹10,000. TDS is deducted on the whole interest once the limit is crossed, not only the excess.
Under Section 206AA, if you do not give the bank a valid PAN, TDS on interest is deducted at 20% (not 10%) and Form 15G/15H cannot be accepted. A wrong or inoperative PAN (not linked with Aadhaar) is treated the same way — always keep your PAN active and linked.
Branch-wise Aggregation for Bank FD Interest
Banks aggregate FD and RD interest across all branches of the same bank at the PAN level (through Core Banking). Splitting deposits between branches of one bank does not avoid TDS.
Three branches of one bank
TDS deducted @ 10%
- Aggregation is within one bank — each different bank has its own separate ₹50,000 / ₹1,00,000 limit.
- Once the limit is crossed, TDS is charged on the entire interest, not just the part above the threshold.
- The deducted TDS shows in your Form 26AS / AIS and is credited against your final tax when you file your return.
Got TDS deducted on interest below the taxable limit? Claim it back by filing your ITR.
File Your ITR →Form 15G vs Form 15H
Form 15G and Form 15H are self-declarations to the bank/NBFC to not deduct TDS when your total income is below the taxable limit. Submit them at the start of each financial year, to every branch/institution separately.
Below 60 years & HUF
- For individuals under 60 and HUFs
- Estimated total income below the basic exemption limit
- Total interest must also be within the exemption limit
- Nil tax payable for the year
Senior citizens 60+
- For resident senior citizens (60 years and above)
- Only condition: estimated tax liability is nil
- No separate interest-ceiling condition
- Easier to qualify than 15G
These forms only stop deduction at source — the interest is still taxable and must be declared in your return. If TDS is already deducted before you submit the form, it cannot be reversed by the bank; you must claim a refund by filing your ITR.
Not sure whether you can file 15G / 15H this year?
Ask a Tax Expert →Savings Interest & Deductions (80TTA / 80TTB)
Savings-account interest is technically covered by 194A but is rarely subject to TDS because it seldom crosses the threshold on its own. You still declare it as "Income from Other Sources" and can claim a deduction — only under the old regime.
| Section | Who | Deduction | Covers |
|---|---|---|---|
| Section 80TTA | Individuals below 60 & HUF | Up to ₹10,000 | Savings-account interest only |
| Section 80TTB | Resident senior citizens (60+) | Up to ₹50,000 | All deposit interest — FD, RD, savings |
80TTA and 80TTB cannot both be claimed. A senior citizen uses 80TTB instead of 80TTA. Both are available only under the OLD tax regime — the new default regime does not allow them.
TDS likely on your interest if
- Bank/post-office interest above ₹50,000 (₹1,00,000 if 60+)
- NBFC / company interest above ₹10,000
- You have not filed a valid 15G/15H
- PAN not given or inoperative (then 20%)
No TDS under 194A if
- Interest stays within the threshold
- Valid 15G/15H filed and income is nil-tax
- Interest paid by a firm to its partner
- Interest on securities (that is Section 193)
Penalties for Not Deducting / Depositing TDS
If you are the payer (deductor) and fail to deduct or deposit 194A TDS, the consequences fall on you, not the recipient:
- Interest u/s 201(1A): 1% per month from the due date of deduction to actual deduction, plus 1.5% per month from deduction to deposit.
- Disallowance u/s 40(a)(ia): 30% of the interest expense can be disallowed while computing your own income.
- Penalty u/s 271C: up to the amount of TDS not deducted.
- Late-filing fee u/s 234E: ₹200/day for late TDS returns (Form 26Q), capped at the TDS amount.
- Prosecution u/s 276B is possible for wilful failure to deposit deducted TDS.
A deductor? Let TaxClue handle your quarterly Form 26Q and TDS deposits.
TDS Return Filing →From FY 2026-27 (1 April 2026), Section 194A is re-numbered as Section 393(1) [Table Sl. No. 5] of the Income-tax Act, 2025. The rate (10%), the ₹50,000 / ₹1,00,000 / ₹10,000 thresholds and the mechanics stay the same — only the section reference changes. For FY 2025-26, keep quoting "194A".
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