Fixed and recurring deposits feel tax-simple, but many people under-report FD interest because the bank did not cut TDS. The rule is simple: all interest is taxable, TDS or not.
How FD interest is taxed
Interest from bank FDs and RDs is added to your income under ‘income from other sources’ and taxed at your slab rate, in the year it accrues, even on a cumulative FD where you receive it only at maturity.
TDS limits
| Depositor | TDS applies when interest from one bank in a year exceeds | Rate |
|---|---|---|
| Below 60 | ₹50,000 | 10% (20% without PAN) |
| Senior citizen (60+) | ₹1,00,000 | 10% (20% without PAN) |
TDS is not the final tax
If you are in the 20% or 30% slab, TDS at 10% leaves more tax to pay. Pay the balance as advance tax or self-assessment tax to avoid interest under 234B and 234C.
Form 15G and 15H
- Form 15G (below 60) and 15H (60+) ask the bank not to deduct TDS.
- You can submit 15G only if the tax on your total income for the year is nil and your interest is within the basic exemption limit.
- Seniors can submit 15H if their total tax for the year is nil after rebate.
- Submit a fresh form to each bank at the start of every financial year. A false declaration is an offence.
Your post-tax return
| FD rate | 10% slab | 20% slab | 30% slab |
|---|---|---|---|
| 7.0% | 6.3% | 5.6% | 4.9% |
| 7.5% | 6.75% | 6.0% | 5.25% |
Before cess. With inflation around 4–5%, a 30% slab taxpayer earns very little real return on an FD. FDs are still right for safety, short goals and emergency money; just do not expect them to build long-term wealth.
Practical tips
- Check AIS each year: it lists FD interest from every bank even when no TDS was cut.
- Splitting deposits across banks avoids TDS but not tax.
- Seniors can claim up to ₹50,000 of deposit interest as a deduction under 80TTB in the old regime.
- For an RD, the same rules apply to the interest earned each year.
Calculators for this guide
Finkoin tip
See your FD maturity, TDS and post-tax amount for your slab in one place.
Try it on Finkoin →FAQs
Clear answers in plain language. Educational guidance only.