TDS on FD – Everything You Need to Know in 2025

What is TDS on FD and Why Does It Matter in 2025?

Fixed deposits (FDs) have always been one of the most trusted savings options for people in India, thanks to their safety and assured returns. But if you are investing in FDs in 2025 or planning to renew your deposits, you need to understand all about the Tax Deducted at Source (TDS) on FD interest. TDS on fixed deposit interest can eat up a portion of your returns if not planned smartly, and not claiming or declaring it appropriately may also create income tax-related hassles later on.

TDS on FD interest is a tax deducted by banks or financial institutions before they pay you the interest earned on your fixed deposit. This ensures that taxes are collected at the source before the investor actually receives the amount. With digitalization and updated rules in 2025, the Income Tax Department uses PAN-linked information to monitor FD interest and TDS closely. Hence, it’s important to stay updated with the latest TDS norms, thresholds, and ways to claim exemptions or refunds.

How is TDS Applied on FD Interest in 2025?

What is the TDS rate for fixed deposit interest?

In 2025, if the total interest earned on fixed deposits in a fiscal year exceeds ₹40,000 (₹50,000 for senior citizens), banks automatically deduct TDS at 10 percent. If you do not provide your PAN, TDS is charged at 20 percent. This deduction is mandatory by law, and the rules apply to FDs in banks, cooperative banks, and post offices.

For example, if your FD interest income at any one bank is ₹45,000 in the current financial year, the bank will deduct TDS on ₹5,000 (₹45,000 - ₹40,000) at 10 percent, which is ₹500.

Is TDS on FD mandatory?

Yes, if your yearly interest income crosses the stated threshold, TDS is mandatory and will be deducted by your bank or NBFC. You cannot avoid it unless your total income is below the taxable limit and you submit the required forms (Form 15G or 15H) in advance each year.

Key Features/Highlights

• TDS deducted at 10 percent if PAN is furnished.
• For no PAN, TDS is deducted at 20 percent.
• Interest threshold for TDS: ₹40,000 for general, ₹50,000 for seniors (2025 rules).
• Applies to all FDs, including post office deposits (except tax saving FDs).
• Forms for TDS exemption: 15G (for those below 60 years), 15H (for 60+ years).
• TDS applies on a per bank per branch basis.

Did you know? As per recent data, over 40 percent new fixed deposits in India in 2024-25 were opened online via digital marketplace platforms that automatically calculate potential TDS liability and help customers manage tax submission proactively.

How do I check and claim TDS already deducted on my FD?

Where can you see TDS deducted on your FDs?

Banks and financial institutions will show TDS deductions clearly in your FD interest statements or passbooks. You can also check the TDS deducted in your Form 26AS online through the Income Tax website. This is important to avoid missing out on refunds or underreporting income.

How to claim refund of TDS on FD?

If your total annual income from all sources (including the interest from FDs) is below the taxable limit, you can claim the TDS back as a refund when you file your income tax return (ITR). Ensure to provide accurate details of the TDS deducted and reflected in your Form 26AS. Refunds are processed digitally, usually within a few months after assessment.

Can senior citizens avoid TDS on FD?

Senior citizens (age 60 and above) can avoid TDS on their FD interest earnings up to ₹50,000 per year by submitting Form 15H. If their total income is not taxable, this form helps them avoid unnecessary tax deduction at the source.

Expert insight Many senior citizens and retirees choose to distribute their fixed deposits across multiple banks to keep interest income below the TDS threshold at each bank, thus reducing TDS deduction and easing tax compliance.

What are the Pros and Cons of TDS on FD?

Advantages of having TDS on FD

• Automatic tax compliance: Ensures you don’t face large tax dues at the end of the year.
• Pays as you earn: Tax is deducted only if you cross the annual threshold.
• Can claim refund: If your total income is below taxable limit, easy to claim TDS refund via ITR.

Disadvantages/Cons to remember

• Reduces immediate returns: Tax is deducted upfront, reducing take-home interest.
• Inconvenience: Need to submit 15G or 15H yearly if you want exemption.
• Refund process: Sometimes, claiming refunds can be time-consuming due to verification.

People also ask:
If my income is below the taxable limit, will TDS still be deducted by the bank?
Yes, banks will deduct TDS automatically unless you submit Form 15G (for individuals below 60) or Form 15H (for senior citizens) at the beginning of the year.

How to Avoid TDS on FD Legally in 2025?

Can Form 15G and 15H help in avoiding TDS deduction?

Anyone whose total income (including FD interest) falls below the taxable limit can submit Form 15G to the bank every financial year. Form 15H is for people aged 60 years or more. This self-declaration helps avoid automatic TDS. However, giving a false declaration is illegal and punishable under tax laws.

Other legal ways to reduce or avoid TDS on FD

• Split FDs between multiple banks to keep annual interest below ₹40,000 at each bank.
• Choose cumulative FDs, where interest is paid at maturity, though TDS may still be deducted if the accrued interest crosses the limit in a year.
• Joint FDs: Spread investments with different joint account holders to split interest income.

Did you know? Popular online FD marketplaces in India now provide automated reminders to fill Form 15G and 15H and help users calculate whether they need to submit it, helping investors avoid unnecessary TDS.

Comparison Table: TDS on FD Interest Across Different Banks/NBFCs (2025)

Expert insight NBFC FDs may sometimes offer higher interest but their TDS rules are identical, so always check and compare maturities and tax benefits across different platforms before investing.

What happens if I do not provide PAN for TDS on FD?

Effects of not linking your PAN with your FD account

If PAN is not provided to your bank or financial institution, they deduct TDS at 20 percent. This is double the usual rate, sharply reducing your effective interest return. It is also harder to claim TDS refunds without PAN, as Form 26AS will not reflect these deductions properly.

People also ask:
How do I update my PAN details for my old fixed deposits?
You can update your PAN by visiting your bank branch or logging into the bank’s internet banking portal, under the KYC update section.

My First-Hand Experience Managing TDS on FDs

As someone managing several fixed deposits across public and private banks, I found the first year confusing. After forgetting to file Form 15G on time, TDS was deducted by my bank, even though my total annual income was below the tax limit. Thankfully, after filing my ITR and including the TDS in the form, I received my refund within four months.

Using online FD comparison websites, like BankBazaar and PaisaBazaar, I was able to match interest rates, pre-calculate net returns after TDS, and get reminders for tax exemption forms. This helped me keep my FD returns optimal, avoid excessive tax deduction, and track my documentation properly. Now, every April, I submit Form 15G and check for TDS in my passbooks and Form 26AS to ensure there are no missing credits.

Did you know? The Income Tax Department now sends SMS alerts in 2025 if your PAN is not furnished for your FD or if TDS deduction has occurred but not matched with your tax records.

Key Points to Remember About TDS on FD

• Always provide your PAN to banks for correct TDS.
• Keep track of total interest earned across all banks and FDs in a financial year.
• Submit Form 15G or 15H if your total income is below taxable limits.
• Regularly check your Form 26AS for TDS credits and ensure accurate reporting.
• Use digital or online FD platforms to compare rates, process exemption forms, and maximize post-tax returns easily.
• File ITR timely to claim any TDS refunds.

People also ask:
Is TDS applicable on NRE or NRO fixed deposits?
No TDS on NRE fixed deposits, but TDS applies on NRO fixed deposits as per standard rules.

Pros and Cons Table for TDS on FD

TL;DR / Quick Recap

• TDS on fixed deposit interest is deducted if your interest at a bank exceeds ₹40,000 annually ₹50,000 for seniors
• PAN must be furnished to avoid higher TDS rate
• Submit Form 15G 15H to claim exemption if your total income is non taxable
• Use online platforms to compare FDs and handle tax exemption forms
• File ITR for any TDS refund and keep Form 26AS updated

People Also Ask - FAQs on TDS on FD

What happens if TDS on FD is more than my total tax liability?

If the TDS deducted by the bank on your FD is more than your tax payable, you can claim the excess amount as a refund while filing your ITR. Ensure accurate TDS reflects in your Form 26AS.

Can I avoid TDS on FD completely?

Yes, by submitting Form 15G or 15H before interest payouts, if you are eligible. Otherwise, splitting FDs across banks or joint accounts can also help stay below the threshold.

How do I know if TDS is deducted on my FD?

You will receive a TDS certificate (Form 16A) from the bank. Also, check your FD account statement and Form 26AS online.

Is TDS on FD applicable every year or only at maturity?

TDS is deducted each year if the interest credited in a financial year exceeds the threshold, even if the FD matures after several years.

Will I still pay TDS if I reinvest the interest in another FD?

Yes, TDS is deducted whenever the accrued interest crosses the yearly limit, regardless of reinvestment or withdrawal.

Which fixed deposit is TDS-free?

Tax-saving five-year FDs in banks are exempt from TDS, but their returns are taxable at maturity.

For accurate and latest TDS regulations or doubts, always consult a qualified tax advisor or refer to the official Income Tax of India portal.

Sources
Income Tax of India: incometax.gov.in
Reserve Bank of India: rbi.org.in
BankBazaar FD comparison: bankbazaar.com/fixed-deposit.html