TDS on FD Interest explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
What Is TDS on FD Interest?
When your Fixed Deposit (FD) earns interest above a specified threshold, the bank is required to deduct Tax Deducted at Source (TDS) before crediting the interest to your account. This deduction is governed by Section 194A of the Income Tax Act, 1961.
| Section | 194A — TDS on Interest (other than securities) |
| Who Deducts | Banks, co-operative societies, post offices, NBFCs, companies |
| Bank Threshold | ₹40,000/yr (₹50,000 for senior citizens aged 60+) |
| NBFC/Company Threshold | ₹5,000/yr |
| TDS Rate | 10% (20% if PAN not provided) |
| Exemption Forms | Form 15G (below 60) / Form 15H (senior citizens) |
| TDS Certificate | Form 16A |
TDS Threshold on FD Interest
| Payer | Regular Threshold | Senior Citizen (60+) |
|---|---|---|
| Banks (scheduled, co-op, RRBs) | ₹40,000 | ₹50,000 |
| Post Office deposits | ₹40,000 | ₹50,000 |
| Companies, NBFCs (non-bank) | ₹5,000 | ₹5,000 |
Note: The threshold applies to interest across all branches of the same bank combined — not per branch.
TDS Rate Under Section 194A
- 10% — PAN provided
- 20% — PAN not furnished (Section 206AA)
- Lower rate — if holding a certificate from Assessing Officer (Section 197)
Calculation Examples
Example — Bank FD (₹8 lakh at 7% for 1 year)
| Item | Amount |
|---|---|
| Annual Interest @ 7% | ₹56,000 |
| TDS triggered? (₹56,000 > ₹40,000) | Yes |
| TDS @ 10% | ₹5,600 |
| Net interest credited | ₹50,400 |
How to Avoid TDS — Form 15G and 15H
If your total income is below the taxable limit, submit a self-declaration to prevent TDS deduction:
- Form 15G — individuals below 60, estimated income below exemption limit
- Form 15H — senior citizens (60+) with nil estimated tax liability
Submit at the start of each financial year — forms are valid for one year only. Most banks accept online submission via net banking.
Section 80TTB — Senior Citizen Deduction
Senior citizens (60+) can deduct up to ₹50,000 of interest income (FD, savings, post office) under Section 80TTB — but only under the old tax regime.
Claiming TDS Credit
- Collect Form 16A from the bank
- Verify TDS in Form 26AS / AIS on the Income Tax portal
- Report gross FD interest under "Income from Other Sources" in ITR
- Claim TDS credit in the TDS schedule
- Excess TDS over tax liability is refunded
TDS on Interest — Full Coverage Table
| Interest Source | Threshold | Rate |
|---|---|---|
| Bank FD / RD | ₹40,000 (₹50,000 senior) | 10% |
| Post Office Time Deposits | ₹40,000 (₹50,000 senior) | 10% |
| NBFC / Company Deposits | ₹5,000 | 10% |
| Savings Bank interest | Not under 194A (deduct 80TTA up to ₹10,000) | N/A |
| PPF / NSC interest | Exempt — no TDS | Nil |
Penalties
| Default | Consequence |
|---|---|
| Not deducting TDS | Interest @ 1% per month |
| Deducted but not deposited | Interest @ 1.5% per month + prosecution risk |
| Late TDS return (Form 26Q) | ₹200 per day under Section 234E |
Summary
TDS on FD interest under Section 194A is deducted at 10% when annual interest exceeds ₹40,000 (₹50,000 for senior citizens) from banks, and ₹5,000 from NBFCs. Submit Form 15G or 15H if your income is below the taxable limit to prevent deduction. Always ensure your PAN is updated with the bank to avoid the 20% rate. Any TDS deducted is fully creditable against your income tax liability and refundable if excess.
Key Facts About TDS on FD Interest
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What is the TDS threshold on FD interest for 2025-26?
₹40,000 per year for regular individuals and ₹50,000 per year for senior citizens from banks and post offices. ₹5,000 for NBFCs and companies.
What is the TDS rate on FD interest?
10% if PAN is provided. 20% if PAN is not furnished under Section 206AA.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
TDS on FD Interest: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.
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Why This Matters
Staying compliant with Indian regulations protects your business from penalties, interest and unnecessary legal trouble. It is always wise to maintain proper records and documentation so that any future scrutiny can be handled smoothly. Rules and thresholds in tds are revised periodically, so it helps to review your obligations at the start of each financial year.