TDS on Fixed Deposit interest is deducted annually by financial institutions under Section 194A of the Income Tax Act, 1961. This applies when interest income exceeds a specified threshold,
Get up to 9.40% p.a. interest, inclusive of additional benefit of 0.50% p.a. for senior citizens and 0.10% p.a. for women
The interest earned from an FD is fully taxable and subject to Tax Deducted at Source (TDS). This amount is debited by the issuer before crediting the interest amount in your account. If the interest received in a financial year exceeds the specified thresholds, a 10% TDS is applicable.
Tax deduction on fixed deposits is higher if you have not submitted PAN details. In this case, the FD issuer will deduct 20% TDS instead. No TDS will be deducted if your total taxable income is below the tax exemption threshold limit. This is provided you submit Form 15G/H depending on your age group.
All interest income beyond the threshold from your fixed deposits is taxable. The current threshold is set at ₹40,000 (₹50,000 TDS on fixed deposit interest for senior citizens) in a financial year across all your bank branches.
If the interest income crosses this limit, TDS on bank FD interest at 10% on the amount exceeding the threshold, provided your PAN is submitted. Without PAN, the rate may increase to 20%.
Whether or not your bank deducts TDS, you must include this amount in your total income when filing an Income Tax Return (ITR).
The income you earn from an FD is categorised under the head 'Income from Other Sources'. If your bank has deducted TDS, this amount will be adjusted against your overall tax liability. You can verify the exact TDS on FD interest by checking your Form 26AS.
Besides, if your total income is below the basic exemption limit (₹2.5 Lakhs for individuals below 60, ₹3 Lakhs for those between 60-80, and ₹5 Lakhs for those above 80), you may be eligible for a refund on deducted TDS. In such cases, you can submit Form 15G (Form 15H for senior citizens) to your bank to avoid TDS deduction.
Remember, even if you don't receive the interest income directly, you still need to declare it in your ITR.
Here’s an illustrative example of how TDS deduction on FD interest works:
a. TDS Deduction on Fixed Deposit for Regular Citizens
Consider that you are an individual aged below 60 years who has invested in 3 fixed deposits. Say your interest income on these FDs is ₹50,000, ₹30,000, and ₹20,000, respectively.
For non-senior citizens, TDS applies if your total interest income from FDs exceeds ₹40,000 in a financial year.
Fixed Deposit |
Interest Income |
Tax Deducted at Source |
FD 1 |
₹50,000 |
TDS is applicable |
FD 2 |
₹30,000 |
No TDS (Interest below limit) |
FD 3 |
₹20,000 |
No TDS (Interest below limit) |
TDS will apply on your first fixed deposit where your interest income exceeds the exemption limit of ₹40,000. Hence, TDS will be deducted at 10% at ₹4,000.
b. TDS Deduction on Fixed Deposit for Senior Citizens
Now, assume you are a retired individual aged over 60 years. Similar to the previous example, you have booked 2 FDs. Here, your interest income from these investments stands at ₹55,000 and ₹45,000, respectively. For senior citizens, the TDS threshold stands at ₹50,000 per financial year.
Fixed Deposit |
Interest Income |
Tax Deducted at Source |
FD 1 |
₹55,000 |
TDS is applicable |
FD 2 |
₹45,000 |
No TDS (Interest below limit) |
In this instance, TDS is applicable on the first FD since the interest earned goes over the limit by ₹5,000. Therefore, the 10% TDS will stand at ₹5,500.
The TDS on FDs is subject to certain exemptions. Here are the TDS limits on FD interest for different taxpayers:
TDS on FD interest for individuals under 60 years does not apply if the total annual interest income is below ₹40,000
For senior citizens, the exemption limit for TDS is ₹50,000
No TDS will be deducted if you choose the new tax regime and your total taxable income is under ₹3 Lakhs
TDS will also not apply if you have opted for the old tax regime and your taxable income is below ₹2.5 Lakhs
If your total taxable income is below the tax limit, you could opt to submit Form 15G/H to avoid TDS deductions on FD interest.
Here are the tax exemption limits:
Non-Senior Citizens (Below 60 years) - The tax exemption limit is ₹2.5 Lakhs
Senior Citizens (Between 60 and 80 years) - The tax exemption limit is ₹3 Lakhs
Super Senior Citizens (Above 80 years) - The tax exemption limit is higher at ₹5 Lakhs
Form Type |
Who Can Get a Waiver |
Form 15G |
Non-senior citizens who have earned income under the taxable income threshold |
Form 15H |
Senior citizens whose income is under the taxable limit |
Check out the methods through which you can apply for a waiver from FD TDS deduction:
Apply Offline
Follow these simple steps to get a TDS waiver offline:
Visit the bank where you have the FD account
Request for the applicable form and fill in the relevant details
Attach all the physical verification documents, such as your PAN card
The bank will verify the submitted documents and approve your request
Apply Online
Follow these steps to complete the application process for a waiver on TDS online:
Visit the Income Tax Filing Portal
Click on the ‘e-file’ button and select the ‘Prepare & Submit Online Form (Other than ITR)’ option
Click on the ‘Form 15G/Form 15H (Consolidated)’ category and prepare an XML zip file
Generate an e-signature for the zip file through the Digital Signature Certificate (DSC) Management Utility
Log in to the portal using the Tax Deduction and Collection Account Number (TAN)
Click on the ‘e-file’ button and choose the ‘Upload Form 15G/15H’ option
Attach the zip file along with the e-signature
You will find a competition message upon successful attachment of the file
Here’s how to claim TDS refund on fixed deposit:
Check Form 26AS to confirm the TDS amount deducted by your bank
Submit your Income Tax Return (ITR), including all sources of income and TDS details, even if your total income is below the taxable threshold
If your total income falls within the exemption limit and TDS has been deducted, you may be eligible for a refund
Ensure your bank account details are accurate in the ITR form to receive the refund directly in your account
After filing, you can track the refund status on the income tax portal to stay updated on its processing
Account Type |
TDS Rate with PAN |
TDS Rate without PAN |
Fixed Deposit |
10% |
20% |
Recurring Deposit |
10% |
20% |
NRO (Non-Resident Ordinary) |
30% |
30% |
10% |
20% |
Understanding the tax implications is crucial when selecting this investment avenue. Here are some conditions pertaining to TDS on fixed deposit interest:
The issuer will determine your annual interest income by taking into account all the FDs you have booked with them
The TDS on FD is calculated on interest earnings and not the principal amount
The computation of the FD tax rate will be in accordance with the tax slabs you fall under
The TDS will be deducted from the PAN of the primary account holder in case of a joint FD account
The interest earned on tax-saving FDs will also attract TDS
Frequently Asked Questions
What is the rate for TDS on FD?
If you have furnished a PAN card, you will have to pay TDS at 10%. If you have not submitted PAN details, the applicable TDS on FD interest will be 20%.
Who deducts TDS on fixed deposit interest?
Issuers are responsible for deducting TDS when making the interest payment. Generally, banks deduct TDS automatically at the end of every financial year.
How much FD interest is tax-free?
If you are below 60 years of age, an annual interest income of over ₹40,000 does not attract TDS. For senior citizens, this exemption limit is ₹50,000 in a financial year. You can also avoid paying taxes on FD interest if your total income is below the taxable limit.
How can I apply for a TDS waiver?
You could avoid paying taxes on FD interest by submitting Form 15G if you're under 60 years, or Form 15H if you're over 60 years. This is provided that your total taxable income is below the threshold.
What is the TDS on the Fixed Deposit rate for NRIs?
Non-resident Indians (NRIs) need to pay a TDS at 30% for a Non-resident Ordinary (NRO) FD account. Interest earned on Non-resident External (NRE) accounts are tax-free.
What is the minimum tax on an FD?
The minimum TDS on an FD interest is 10% if the interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year, provided PAN is submitted.
When to Pay Tax on FD Interest Income?
Tax on an FD interest income is payable at the end of the financial year when you file your Income Tax Return (ITR).
Will I be issued a certificate for the TDS on an FD?
Yes, banks issue a TDS certificate (Form 16A) showing the amount of TDS deducted on your FD interest
What is the use of Form 26AS for TDS on a Fixed Deposit?
Form 26AS provides a summary of the TDS deducted on your FD interest, which you can use to verify and claim credit while filing your ITR.
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