TDS on FD Interest — Limits, Rates & How to Avoid
TDS on FD interest: ₹50,000 threshold (₹1 lakh for seniors), 10% rate, 20% without PAN, Form 121 (earlier 15G/15H), and how to claim a refund.
Updated 30 September 2026 · 25 banks trackedWhat you need to know
Banks deduct tax at source (TDS) on FD and RD interest once your interest from that bank in a financial year exceeds ₹50,000 — or ₹1,00,000 for senior citizens (limits raised from ₹40,000/₹50,000 from 1 April 2025). The rule was Section 194A of the Income-tax Act, 1961 and continues under the Income-tax Act, 2025 from 1 April 2026.
TDS rules at a glance
| Rule | Details |
|---|---|
| Threshold (below 60) | ₹50,000 interest per FY per bank |
| Threshold (60+) | ₹1,00,000 interest per FY per bank |
| Rate with PAN | 10% |
| Rate without PAN | 20% |
| NRO deposits | 30% + surcharge + cess (DTAA relief possible) |
| NRE / FCNR | No TDS |
| When deducted | On credit or accrual of interest, whichever is earlier — yearly for cumulative FDs |
| Declaration to avoid TDS | Form 121 (from 1 Apr 2026; replaced Form 15G/15H) |
Worked example
| Case | Result |
|---|---|
| FD of ₹10 lakh @ 7% (cumulative) | Interest accrued in year 1 ≈ ₹71,859 |
| Below 60 | Crosses ₹50,000 → TDS 10% ≈ ₹7,186 |
| Senior citizen | Below ₹1 lakh → no TDS |
| Final tax | Depends on your slab; TDS is adjusted when you file ITR |
How to handle TDS
- Submit Form 121 in April each year if your tax on total income is nil.
- Link PAN to the deposit to avoid 20% TDS.
- Check TDS in Form 26AS / AIS and claim credit in your return.
- If TDS exceeds your tax, file ITR to claim the refund.
Frequently asked questions
Is TDS the same as tax?
TDS is an advance tax. Your final liability depends on your slab.
Is the threshold per branch or per bank?
Per bank — all branches with core banking are combined.
Is TDS deducted on RD interest?
Yes, RD interest is included in the same threshold.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.