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Fixed-deposit (FD) interest is generally part of your taxable income, even when a bank does not deduct tax at source (TDS). Forms 15G and 15H do not make interest tax-free: for eligible taxpayers and the relevant tax years, they are declarations asking a payer not to withhold TDS. For a tax year beginning on or after 1 April 2026, the Income Tax Department says to use the unified Form 121 instead.
Keep two questions separate: whether TDS is due on the interest under the payer-specific threshold, and how much tax you owe on your total income. The withholding threshold does not decide whether your FD interest is taxable.
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How FD interest is taxed
For Indian income-tax purposes, include your FD interest when calculating your total income for the relevant tax year. The amount of tax ultimately payable depends on your full income, applicable tax regime, eligible deductions or rebates, and personal circumstances—not on whether a bank withheld TDS or whether the interest came from one deposit or several.
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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11Use your passbook and fixed-deposit receipts (FDRs) to work out the interest for the relevant period. Interest is not tax-free merely because it remained in the account, was reinvested, or fell below the TDS threshold. The Income Tax Department’s ITR-2 guidance identifies passbooks and FDRs as useful records and advises taxpayers to reconcile interest and tax details with Form 16A and Form 26AS/AIS.
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TDS is an advance collection, not the final tax bill
TDS is tax withheld by the payer and reported against you. It is a credit to reconcile when you prepare your return; it is not a separate tax on top of your final liability. If the correct tax on your total income is greater than your available credits, you may still need to pay the balance. If more was withheld than is due, the excess may be claimed as a refund through the return, subject to the applicable rules.
Conversely, a bank’s decision not to deduct TDS does not establish that you owe no tax. You must still include taxable interest in your income calculation and settle any resulting liability through the applicable tax process.
When banks and other payers must deduct TDS
For interest covered by Section 194A and credited or paid from 1 April 2025, the annual threshold for interest from a bank, cooperative bank or notified post office is ₹50,000 for a person other than a senior citizen and ₹1,00,000 for a senior citizen. These are withholding thresholds, not income-tax exemptions. The threshold applies to the relevant payer’s interest total for the year, rather than serving as a general exemption for each individual FD.
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| Payer and interest category | Annual Section 194A TDS threshold effective 1 April 2025 |
|---|---|
| Bank, cooperative bank or notified post office; person other than a senior citizen | ₹50,000 |
| Bank, cooperative bank or notified post office; senior citizen | ₹1,00,000 |
| Other payer cases covered by the changed Section 194A threshold | ₹10,000 |
The ₹10,000 figure is for other payer cases under the Finance Bill 2025 change; do not apply it as the threshold for bank, cooperative-bank or notified post-office interest. The applicable payer category and the date of the credit or payment matter. These figures describe when withholding may be triggered under the stated rule; they do not determine whether interest must be reported or taxed.
How to use the threshold
- Identify who pays or credits the interest: a bank, cooperative bank, notified post office, or another payer covered by Section 194A.
- Add the relevant interest for that payer and tax year, using the applicable category and threshold.
- If the total crosses the threshold, check the payer’s TDS treatment and whether you qualify to submit the declaration applicable to that tax year.
- Whether or not TDS was withheld, include the interest when calculating your total income.
Crossing a threshold can lead to withholding; being below it does not by itself show that the income is exempt. A declaration also cannot change the underlying tax treatment of interest.
For example, if a non-senior depositor’s relevant interest total with a bank is ₹52,000, that exceeds the stated ₹50,000 threshold; it does not mean only the amount above ₹50,000 is taxable. The threshold determines whether the payer’s withholding rule may apply. Your tax calculation still includes the interest and depends on your total income and applicable rules. Likewise, interest totals across multiple FDs with the same payer matter; do not treat each receipt as a separate threshold allowance.
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Which form applies: Form 15G, Form 15H or Form 121?
The applicable declaration depends on the tax year. Under the Income-tax Act, 1961 framework, eligible taxpayers could give Form 15G or Form 15H to a payer, such as a bank, requesting non-deduction of TDS. The Income Tax Department describes both as self-declarations. They are not universal forms for every depositor, and submitting one does not itself make a deposit’s interest tax-free.
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|---|---|
| Period governed by the Income-tax Act, 1961; eligible resident individual under 60 and other eligible persons, subject to the prescribed conditions | Form 15G |
| Period governed by the Income-tax Act, 1961; eligible resident individual aged 60 or more | Form 15H |
| Tax year beginning on or after 1 April 2026 | Unified Form 121 under the Income Tax Act, 2025 |
Form 15G is generally for eligible residents under 60 and certain other eligible persons, subject to prescribed income conditions; companies and firms are excluded. Form 15H is for a resident individual aged 60 or more. Age and residence alone do not establish eligibility: the applicable income conditions and prescribed form instructions also matter. The Income Tax Department says the eligibility criteria continue under the new Act while the declaration format changes.
The Department describes the older forms as “self -declarations submitted by eligible taxpayers to the payer (such as a bank or financial institution) requesting non -deduction of TDS.” The key words are eligible and requesting: the declaration concerns withholding and must be made truthfully to the payer. It is not an application to convert taxable interest into exempt income.
The 2026 transition and the relevant date
For a tax year beginning on or after 1 April 2026, the Income Tax Department says the required declaration is Form 121, prescribed under the Income Tax Rules, 2026. Do not rely on Forms 15G or 15H as the declaration format for that new tax year. Check the Department’s prescribed form and instructions and use the payer’s process for submitting it.
The Department’s official Income Tax Forms FAQ states: “For a tax year beginning on or after 01.04.2026, such declaration must be furnished in Form No. 121 as prescribed under the Income Tax Rules, 2026”. In practice, first identify the tax year to which the interest credit or payment belongs; then use the declaration format prescribed for that period.
For a transaction near the transition, distinguish the date interest is credited from the date it is paid. The Department’s guidance says a credit on 31 March 2026 remains governed by the old Act even if payment occurs in April. That example matters because a payment date alone may not identify the governing framework. For another borderline transaction, verify the actual credit or payment treatment with the payer and the relevant official rules.
Do not submit a declaration unless you qualify
A no-TDS declaration is appropriate only when you meet the conditions for the relevant form and tax year. Follow the prescribed form instructions, provide accurate information about your estimated income, and submit it to the payer through its accepted process. Do not assume a bank must accept a declaration from anyone who requests one.
If your total income means tax is payable, preventing withholding can leave you with tax to pay when you file. Consider the likely final liability, not just the prospect of a smaller deduction from your FD interest. A declaration may improve cash flow during the year, but it does not remove the need to budget for any tax that remains payable.
Senior citizens: separate the TDS threshold from Section 80TTB
Two rules can matter to eligible senior citizens, but they do different jobs. For the stated Section 194A payer categories, the senior-citizen TDS threshold is ₹1,00,000 in a year from 1 April 2025. Separately, the Income Tax Department’s guidance for AY 2026-27 describes a Section 80TTB deduction of up to ₹50,000 for eligible senior citizens on qualifying interest from deposits with banks, post offices and cooperative banks, including FDs.
| Rule | What it affects | Stated figure and period |
|---|---|---|
| Section 194A threshold for relevant bank, cooperative-bank and notified post-office interest | Whether the payer must withhold TDS under the threshold rule | ₹1,00,000 for senior citizens; effective 1 April 2025 |
| Section 80TTB deduction for qualifying deposit interest | Taxable income, if the taxpayer and interest meet the conditions | Up to ₹50,000 for AY 2026-27 |
A threshold controls withholding; a deduction can reduce taxable income if its requirements are met. Neither figure should be treated as a substitute for the other, and the deduction is not an automatic exemption for all interest received by every person aged 60 or more.
These amounts can therefore point in different directions. An eligible senior citizen could be within the TDS threshold but still need to include interest in the return and consider whether Section 80TTB applies. Another senior citizen could exceed the TDS threshold while still being entitled to claim a qualifying deduction when calculating taxable income. Eligibility for either rule has to be checked on its own terms.
How to report FD interest and reconcile TDS
Use this workflow when preparing your return. The purpose is to report the income accurately and make sure any withholding appears as a credit, rather than treating the bank’s TDS record as your complete tax calculation.
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- Gather your records. Collect passbooks and FDRs for the relevant tax year. Work out the FD interest attributable to that period rather than relying only on the cash you happened to withdraw.
- Check the payer’s figures. Compare the interest and TDS information with Form 16A, Form 26AS and the Annual Information Statement (AIS), where available. Investigate differences in interest amounts, timing or tax credit before filing.
- Include the interest in your income. Report it even if the payer did not deduct TDS or the interest was below a withholding threshold. Calculate the effect using your full income and the regime applicable to you.
- Reconcile withheld tax. Match the TDS credit shown in your return records against Form 16A and Form 26AS/AIS. Do not add the withheld amount to your tax bill a second time; account for it as tax already collected.
- Check declarations separately. If you want to request non-deduction, verify your residence, age or eligible category, income conditions, payer process and the declaration required for the tax year. For a tax year starting 1 April 2026, use Form 121.
If the records do not match
- If a bank statement or FDR shows interest that is missing from another record, use your underlying deposit records to calculate the income and seek clarification from the payer about the mismatch.
- If tax was withheld but the credit is not reflected in your return records, compare the payer’s Form 16A details with Form 26AS/AIS and ask the payer to correct any reporting error.
- If no TDS appears, do not infer that the interest is non-taxable. Report the interest based on your deposit records and calculate any tax due separately.
Form 16A is useful for checking the payer’s TDS reporting, while Form 26AS and AIS provide return-preparation information against which you can reconcile. If a figure differs, do not simply omit the interest or claim a credit that is not reflected in the records. Keep the passbook or FDR details at hand while clarifying the discrepancy and checking the updated tax records.
AY 2026-27 tax rates are context, not a personal calculation
The Income Tax Department’s ITR-2 FAQ gives the following new-regime slab figures for assessment year (AY) 2026-27. An assessment year is not the same label as a tax year; use the guidance for the period in which the interest arose and the return being filed.
| AY 2026-27 new-regime total-income band | Rate stated in the Department FAQ |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
The same Department FAQ describes a rebate of up to ₹60,000 for total income up to ₹12 lakh under the new regime. These are AY 2026-27 figures, not a universal rate for every taxpayer or year. The tax on your FD interest depends on your aggregate income and eligibility for the applicable regime, deductions and rebate. Do not apply a slab rate directly to one FD in isolation or assume that a stated rebate applies without meeting its conditions.
For an individual calculation, the relevant starting point is the person’s total income, not the interest figure viewed alone. Add the interest to the income picture for the applicable period, consider the tax regime and eligible deductions or rebates, and then compare the resulting liability with tax already withheld or paid. Someone with identical FD interest to another depositor may have a different final outcome because their other income, eligibility and circumstances differ. The AY 2026-27 slabs and rebate are useful dated context, not a prediction of a particular depositor’s bill.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Common mistakes to avoid
- Treating the TDS threshold as a tax-free allowance: the threshold governs withholding under the specified payer rule, not whether interest belongs in your income calculation.
- Using a declaration as a tax exemption: Forms 15G, 15H and 121 concern withholding, subject to eligibility; they do not erase an otherwise taxable amount.
- Using the wrong year’s form: identify whether the relevant tax year is under the old Act or begins on or after 1 April 2026, when Form 121 applies.
- Applying the bank threshold to every payer: the ₹50,000 and ₹1,00,000 thresholds relate to the stated bank, cooperative-bank and notified post-office cases; other payer cases have a separate ₹10,000 threshold under the 2025 change.
- Assuming a senior-citizen deduction equals a TDS limit: Section 80TTB and Section 194A address taxable income and withholding respectively.
- Ignoring interest because no TDS was taken: report interest using your deposit records and reconcile the tax credits independently.
- Counting each FD as its own threshold: check the relevant payer’s interest total for the year rather than treating each individual deposit as a separate allowance.
- Assuming a form guarantees that no tax will be due: a valid declaration can affect withholding only; if your overall income produces a liability, you remain responsible for that balance.
What to verify before filing
Tax thresholds, forms and slab figures depend on the period and rules that apply. Before submitting a declaration or return, confirm the relevant tax year, the date the interest was credited or paid, the payer category, your eligibility and the current official form instructions. A specific final tax figure cannot be determined from an FD balance or interest amount alone; it requires your complete income and circumstances.
Frequently Asked Questions
Is FD interest taxable if the bank does not deduct TDS?
Yes, FD interest should still be included in your income calculation for the relevant tax year. The TDS threshold governs withholding, not whether the interest is taxable.
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What is the TDS limit on FD interest from a bank?
For interest covered by Section 194A and credited or paid from 1 April 2025, the stated annual threshold is ₹50,000 for a person other than a senior citizen and ₹1,00,000 for a senior citizen for bank, cooperative-bank and notified post-office interest. Other payer cases have a separate ₹10,000 threshold under the 2025 change.
Does Form 15G or Form 15H make FD interest tax-free?
No. These are declarations requesting non-deduction of TDS from a payer, subject to eligibility and the rules for the relevant tax year. You must still report taxable interest and pay any tax due on your total income.
Who can submit Form 15G or Form 15H?
Under the Income-tax Act, 1961 framework, Form 15G is generally for eligible residents under 60 and certain other eligible persons, subject to prescribed conditions; companies and firms are excluded. Form 15H is for an eligible resident individual aged 60 or more. Check the prescribed instructions because age or residence alone does not establish eligibility.
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For a tax year beginning on or after 1 April 2026, the Income Tax Department says to furnish the unified Form 121 under the Income Tax Act, 2025. The Department’s transition guidance says a credit on 31 March 2026 remains under the old Act even if payment occurs in April.
What is the difference between the senior-citizen TDS threshold and Section 80TTB?
The Section 194A threshold controls whether the payer withholds TDS; the senior-citizen threshold for the stated bank, cooperative-bank and notified post-office cases is ₹1,00,000 from 1 April 2025. Section 80TTB is a separate potential deduction of up to ₹50,000 for qualifying deposit interest for eligible senior citizens for AY 2026-27. One concerns withholding and the other taxable income.
What records should I use to report FD interest and claim TDS credit?
Use your passbook and FDRs to calculate interest for the relevant period. Compare the figures with Form 16A, Form 26AS and AIS, where available, and reconcile any TDS credit before filing.
The Bottom Line
Include FD interest in your income calculation even when no TDS was deducted. Check the payer-specific threshold and your declaration eligibility separately: Forms 15G/15H apply under the relevant old-Act periods, while Form 121 applies for tax years beginning on or after 1 April 2026. TDS affects withholding, not the final tax due on your total income.
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