Last updated: 11 October 2026 · Rates checked against: Income Tax Department — TDS from interest (sections 194A and 206AA)
Reviewed by Zia Shahid, Buzdy Banking Editor · Our methodology
In this guide
Your bank deducts tax before paying FD interest. The rate doubles if it does not have your PAN — and the form used to stop the deduction altogether has changed.
With PAN — TDS at 10% under section 194A
Without PAN — 20% under section 206AA
Section 206AA requires tax to be deducted at the higher of the rate in the Act, the rate in force, or 20% where PAN is not furnished.
The two rates
Section 194A sets TDS on interest other than on securities at 10%. Section 206AA then says that where the payee does not furnish a PAN, tax is deducted at the higher of: the rate in the relevant provision, the rate in force, or 20%.
| Situation | TDS rate | Provision |
|---|---|---|
| PAN furnished to the bank | 10% | section 194A |
| PAN not furnished | 20% | section 206AA |
The threshold
TDS applies once interest crosses the annual threshold for the year, counted per bank across all its branches under core banking. For FY 2025-26 the reported threshold is ₹50,000 for individuals below 60 and ₹1,00,000 for senior citizens. Confirm the current figure for the year you are asking about, because this limit has moved more than once.
Form 15G and 15H have been replaced
A person whose total income is below the taxable limit could stop TDS by filing Form 15G, or Form 15H if a senior citizen. From 1 April 2026 these are reported to be consolidated into a single declaration, Form 121, under the Income Tax Act 2025.
Whichever form applies, PAN is required — a declaration without it does not prevent the 20% rate.
TDS is not the same as the tax due
TDS is a deduction on account, not a final settlement. FD interest is added to your total income and taxed at your slab; the TDS already taken is credited against that. If your slab rate is higher than 10%, more may be payable; if lower, the excess comes back.
Frequently asked questions
My interest is below the threshold. Will the bank still deduct?
TDS applies once interest crosses the threshold for the year at that bank. Below it, no deduction is made.
Is the limit per account or per bank?
It is counted per bank, aggregating branches under core banking — not per account.
Does no TDS mean no tax?
No. Interest below the TDS threshold is still part of your taxable income.
What replaces Form 15G and 15H?
A unified self-declaration, reported as Form 121, from 1 April 2026 under the Income Tax Act 2025. PAN remains mandatory.
Sources
This is information, not tax advice. The figures above were checked against the source named at the top of this page on 11 October 2026. Tax rules change, usually with each annual budget. For a decision about your own money, speak to a qualified tax adviser in your country.
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