TDS on FD Interest: When It's Deducted & How Much
By the QuickYield Team · Published August 24, 2026 · 5 min read
Does the bank deduct tax on your FD interest? Only once your annual interest crosses ₹40,000 (₹50,000 if you’re a senior citizen) — but once it does, TDS applies to the entire interest amount, not just the portion above the threshold. On ₹60,000 of annual interest, that’s ₹6,000 deducted with PAN on file, or ₹12,000 without it.
The threshold is a cliff, not a slope
This trips people up: interest of exactly ₹40,000 has zero TDS, but ₹40,001 gets TDS on the full amount, not just the ₹1 that crossed the line. There’s no partial or marginal treatment here the way income tax has slabs — TDS on FD/savings interest is all-or-nothing once you cross the threshold.
TDS table by annual interest income
| Annual interest | TDS (PAN on file, 10%) | TDS (no PAN, 20%) |
|---|---|---|
| ₹30,000 | ₹0 (below threshold) | ₹0 (below threshold) |
| ₹40,000 (exactly) | ₹0 (at threshold) | ₹0 (at threshold) |
| ₹60,000 | ₹6,000 | ₹12,000 |
| ₹1,00,000 (1 lakh) | ₹10,000 | ₹20,000 |
Why not submitting your PAN costs you double
Banks are required to deduct TDS at 20% instead of the standard 10% if you haven’t provided your PAN — a straightforward oversight that doubles your deduction for no benefit. This is one of the simplest, most avoidable tax costs: make sure every bank holding your FD or savings account has your PAN on file. Check your own numbers with our TDS Calculator.
TDS deducted isn’t your final tax — it’s an advance
TDS on interest is deducted at a flat rate regardless of your actual income tax slab. If your slab rate is lower than the TDS rate, you’ll get the excess refunded when you file your return; if it’s higher, you’ll owe the difference. Either way, TDS being deducted doesn’t mean your FD interest tax liability is settled — it still needs to be declared as income and reconciled at filing time.
Frequently asked questions
›FD interest par TDS kitna katega?
Agar annual interest ₹40,000 (senior citizens ke liye ₹50,000) se zyada hai, toh 10% TDS katega agar PAN diya hai, ya 20% agar PAN nahi diya — yeh poori interest amount par lagta hai, sirf threshold se zyada wale hisse par nahi.
›Can I avoid TDS on FD interest if my total income is below the taxable limit?
Yes — submit Form 15G (or Form 15H if you’re a senior citizen) to your bank declaring your income is below the taxable threshold, and the bank won’t deduct TDS, provided you’re actually eligible.
›Is TDS deducted per bank or across all my FDs combined?
The ₹40,000/₹50,000 threshold applies per bank (across all your FDs/deposits at that specific bank), not across every bank you have accounts with — so interest spread across multiple banks is evaluated separately at each one.
Try it yourself
Open the TDS Calculator →
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This article is for general information only and isn’t financial, tax, or legal advice. See our disclaimer.