TDS on FD - Ultimate Guide 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. The TDS on interest earned on fixed deposits can gobble up a part of your returns unless it is planned intelligently and failure to claim or report the same may also result in income tax related inconveniences in the future.

TDS on FD interest is a tax that is deducted by the banks or financial institutions before they pay you interest earned on your fixed deposit. This will make sure that the investor does not get the amount before taxes are paid at the source. The Income Tax Department monitors FD interest and TDS closely with the digitalization and new rules in 2025 using PAN-linked information. Therefore, one should be abreast of the new TDS norms, threshold, and exemptions or refund claim procedures.

What is FD Interest TDS Applied in 2025?

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. In the case you fail to provide your PAN, TDS is at 20 percent. This deduction is compulsory and the regulations are on 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 FD TDS compulsory?

Yes, in case your annual interest earnings exceed the mentioned limit, TDS will be compulsory and will be withheld 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.

Features/Highlights

• TDS of 10 percent will be deducted in case of PAN furnished.
• Without any PAN, TDS is taken 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 is charged on per bank per branch basis.

Haven’t you heard? According to current statistics, in 2024-25, more than 40 percent of new fixed deposits in India were taken online using digital marketplace platforms where potential TDS liability is automatically calculated, and customers can take care of taxes submittals in advance.

What to do to verify and claim TDS already deducted on my FD?

The deduction of TDS will be reflected in your FD interest statements or passbooks by banks and financial institutions. The TDS deducted by you can also be verified online in your Form 26AS on the Income Tax site. This is essential in order to not miss the refunds or underreport the income.

Claiming 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). Make sure you give the correct information as regards the TDS deducted and shown in your Form 26AS. Refunds are done electronically and they take place about a few months after the assessment.

Do senior citizens get exemption on 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. This form will help them evade the unnecessary tax deduction at source in case their total income is not taxable.

Professional knowledge — Multi-banking: Many elderly citizens and retirees prefer to spread their fixed deposits in different banks so that the interest income in each bank is within the TDS limit and therefore the TDS will be lower and easier to comply with taxes.

What are Pros and Cons of TDS on FD?

Pros

• Automatic tax compliance: Makes sure that you do not have huge tax liabilities at the year end.
• Tax on earnings: You pay taxes on a yearly basis only when you exceed the annual limit.
• Eligible to refund: In case your total income is less than the taxable limit, it is easy to claim TDS refund through ITR.

Cons

• Decreases short term payoffs: Tax is paid in advance, lowering take home interest.
• Inconvenience: You must file 15G or 15H once a year in case you want to be exempted.
• Refund process: There are instances where claiming refunds is time consuming as a result of verification.

Q: In case I have an income that is less than the taxable amount, will the bank deduct TDS at all?
A: 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.

What is the way around TDS on FD in 2025?

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 to individuals over the age of 60 years. Such self-declaration prevents automatic TDS. Nevertheless, making a false statement is unlawful and contravention of tax legislation.

Some of the other legal methods of minimizing or evading TDS on FD

• Divide FDs across different banks in order to ensure that the annual interest is less than 40,000 at any bank.
• Select cumulative FDs with interest paid at maturity, but TDS could be deducted even in case the accrued interest exceeds the limit in any year.
• Joint FDs: Invest money in the joint account of different people to share interest earnings.

And you know? The common online FD marketplace in India now offers automated prompts to complete Form 15G and 15H and assists the user to calculate whether they require to file it so that investors do not have to pay unnecessary TDS.

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

Expert tip: NBFC FDs can in some cases come with a better rate of interest but the TDS regulations are the same, so be sure to compare maturity and tax advantages on various platforms and invest accordingly.

What will be the consequence of not reporting PAN on TDS on FD?

Your bank or financial institution charges TDS (at 20 percent) in case PAN has not been furnished to them. This is twice the normal rate, which extremely lowers your effective interest payback. Claiming TDS refunds without PAN is also difficult because Form 26AS will not show the deductions in the right manner.

Q: What should I do to update my PAN details of my old fixed deposits?
A: To update your PAN you have to go to your bank branch, or go to the Internet banking portal of your bank, under the KYC update section.

My Personal Efforts in dealing with TDS on FDs

Being one of the individuals who had various fixed deposits in both the public and the private banks, the first year was confusing. I had not remembered to file Form 15G in time and my bank had already deducted TDS although my total annual income was below the tax exemption limit. I am glad to state that I received my refund in four months after submitting my ITR and mentioning the TDS in the form.

With the help of online FD comparison sites, such as BankBazaar and PaisaBazaar, I was able to compare interest rates, calculate net returns after TDS in advance and receive tax exemption form reminders. This assisted me in maintaining my FD returns to the best and not to over-deduct taxes and monitor my records. Today, I fill in Form 15G and look at TDS on my passbooks and Form 26AS every April to make sure that I do not have any credit shortages.

Did you know? In 2025, the Income Tax Department sends you SMS alerts when you have not provided your PAN against your FD or when there is TDS deduction but not reconciled against your tax records.

Important Facts to Note About TDS on FD

• Always furnish your PAN to banks to make TDS correct.
• Maintain an account of aggregate interest earned in all banks and FDs in a financial year.
• Submit Form 15G or 15H in case you earn less than taxable limits.
• Ensure that you regularly look at your Form 26AS to see the TDS credit and report them correctly.
• Compare the rates, process exemption forms and maximize the post-tax returns using digital or online FD platforms.
• Make timely filing of ITR to avail TDS refunds.

There are other questions posed by people:

Q: Does TDS apply to NRE / NRO fixed deposits?
A: NRE fixed deposits have no TDS levied but TDS is applicable on NRO fixed deposits under usual regulation.

TDS on FD Pros and Cons Table

In a nutshell / TL;DR / Quick Recap

• The interest on fixed deposit is subject to TDS provided your interest income with a bank in a year is over ₹40,000 / ₹50,000 in case of seniors.
• To prevent an increase in TDS rate, PAN has to be provided.
• Claim exemption by filling Form 15G / 15H in case your total income is non-taxable.
• Compare FDs and manage tax exemption forms on the internet.
• ITR should be filed to claim any TDS refund and Form 26AS should be maintained.

Frequently Asked Questions - TDS on FD

Q: What would occur in case TDS on FD exceeds my tax liability?
A: In case the TDS that the bank has deducted on your FD is higher than the tax you pay, then you are entitled to claim the difference as a refund during ITR filing. Make sure that correct TDS appears in your Form 26AS.

Q: Is there any way to avoid TDS on FD?
A: Yes, provided you are eligible, by filing Form 15G or 15H prior to paying out interest. Otherwise, the division of FDs between banks or joint accounts may also be used to remain within the threshold.

Q: How can I tell whether my FD has TDS deducted?
A: You will receive a TDS certificate (Form 16A) from the bank. Check your FD account statement and Form 26AS online as well.

Q: Is TDS on FD applicable throughout the year or only on maturity?
A: Even the FD maturing after many years, TDS is deducted annually in case the interest credited in a financial year is above the threshold.

Q: Do I have to pay TDS in case I reinvest the interest in a different FD?
A: Yes, TDS is deducted when the interest accrued exceeds the limit of interest per annum whether you reinvest or withdraw.

Q: What TDS-free fixed deposit is there?
A: Banks have tax-saving five-year FDs which do not have TDS, but the returns will be liable to tax at the end of the maturity period.

To obtain the right and up-to-date TDS provisions or clarifications, a qualified tax professional should be consulted or the official Income Tax of India portal should be visited.

Sources:

• Income Tax of India
• Reserve Bank of India