Fixed Deposit Limits & TDS Rules for FY 2025-26: Taxation, Reporting & Senior Citizen Benefits
Fixed Deposit Limits for Senior Citizens and Others
Fixed Deposit (FD) investment is a popular choice for individuals looking
for a secure and fixed return on investment. The limits and taxation
rules vary for senior citizens and other individuals. The government
provides higher interest rates and tax exemptions for senior citizens to
support their financial needs.
In FY 2025-26, the threshold limits for Tax Deducted at Source
(TDS) on interest earned from FDs have been revised. This article outlines
the eligibility criteria, taxation rules, and reporting requirements for FD
interest income for different categories of individuals.
Meaning of Senior Citizen
A Senior Citizen is an individual who is 60 years or older but less
than 80 years during the financial year. A Very Senior Citizen is
someone 80 years or older.
- If a person turns 60 years of age on 15th July 2025, he will be considered a Senior Citizen for FY 2025-26.
- If a person turns 79 years of age during FY 2025-26, he is a Senior Citizen.
- If a person turns 80 years of age on 20th November 2025, he will be considered a Very Senior Citizen for FY 2025-26.
- If a person turns 59 years of age during the entire financial year 2025-26, he will not be considered a Senior Citizen.
For FY 2025-26, the proposed TDS limits on FD interest are:
|
Section |
Payer |
FY 2024-25 (AY 2025-26) |
FY 2025-26 (AY 2026-27) |
|
194A |
Senior Citizens (Bank/Post Office) |
₹50,000 |
₹1,00,000 |
|
194A |
Other Residents |
₹40,000 |
₹50,000 |
|
194A |
Others |
₹5,000 |
₹10,000 |
TDS Scenarios with PAN Available
|
Category |
FD Amount (₹) |
Interest Rate |
Interest Earned (₹) |
TDS Applicable? |
TDS Rate |
TDS Amount (₹) |
|
Senior Citizen |
20,00,000 |
8% |
1,60,000 |
Yes |
10% |
16,000 |
|
Senior Citizen |
10,00,000 |
8% |
80,000 |
No |
N/A |
0 |
|
Other Individual |
5,00,000 |
8% |
40,000 |
No |
N/A |
0 |
|
Other Individual |
7,00,000 |
8% |
56,000 |
Yes |
10% |
5,600 |
- No TDS for Senior Citizens if FD interest
≤ ₹1,00,000.
- No TDS for Other Individuals if FD interest
≤ ₹50,000.
- TDS at 10% rate applies when interest exceeds limits.
TDS Scenarios without PAN or
Inoperative PAN
- If PAN is not available or not linked with Aadhaar, TDS
rate is 20% (as per Section 206AA).
- Example:
|
Category |
FD Amount (₹) |
Interest Earned (₹) |
PAN Available? |
TDS Rate |
TDS Amount (₹) |
|
Senior Citizen |
20,00,000 |
1,60,000 |
No |
20% |
32,000 |
|
Other Individual |
7,00,000 |
56,000 |
No |
20% |
11,200 |
TDS on FDRs Across Multiple Banks
|
Category |
Bank |
FD Amount (₹) |
Interest Earned (₹) |
TDS Threshold (₹) |
TDS Applicable? |
TDS Amount (₹) |
|
Senior Citizen |
ICICI |
10,00,000 |
80,000 |
1,00,000 |
No |
0 |
|
Senior Citizen |
SBI |
10,00,000 |
80,000 |
1,00,000 |
No |
0 |
|
Other Individual |
ICICI |
10,00,000 |
80,000 |
50,000 |
Yes |
8,000 |
|
Other Individual |
SBI |
10,00,000 |
80,000 |
50,000 |
Yes |
8,000 |
Form 15G/15H Submission to Avoid TDS
|
Category |
Age |
FD Interest (₹) |
TDS Threshold (₹) |
Form to Submit |
TDS Applicable if Form NOT
Submitted? |
TDS if Form Submitted? |
|
Senior Citizen |
70 |
80,000 |
1,00,000 |
Form 15H |
No |
No |
|
Other Individual |
59 |
80,000 |
50,000 |
Form 15G |
Yes |
No |
- Senior citizens with taxable income below
exemption limit can submit Form 15H.
- Other individuals with taxable income below
exemption limit can submit Form 15G.
Taxation of FD Interest Income
Fixed Deposit (FD) interest income is fully taxable in India and falls
under the head Income from Other Sources in an individual's Income Tax
Return (ITR). The taxation of FD interest is based on the taxpayer’s applicable
income tax slab rate.
1. Head of Income
- Interest income from fixed deposits is not considered salary,
business income, or capital gains, but is instead classified under Income
from Other Sources.
- This income must be reported in ITR forms such as ITR-1 or ITR-2,
depending on the taxpayer’s total income structure.
2. Taxability and Slab Rates (New
Regime for AY 2026-27)
|
Income Slab (₹) |
Tax Rate (%) |
|
0 – 4,00,000 |
Nil |
|
4,00,001 – 8,00,000 |
5% |
|
8,00,001 – 12,00,000 |
10% |
|
12,00,001 – 16,00,000 |
15% |
|
16,00,001 – 20,00,000 |
20% |
|
20,00,001 – 24,00,000 |
25% |
|
Above 24,00,000 |
30% |
- No tax up to ₹12 lakh due to the increased rebate
under Section 87A.
- The new tax regime is the default option, but taxpayers can
choose the old regime if beneficial.
- Senior citizens (60+ years) can claim a deduction of up to ₹50,000 on FD interest under Section 80TTB (Old Regime only).
- Health & Education Cess (4%) applies on
total tax liability.
3. TDS (Tax Deducted at Source) on FD
Interest
- Banks, cooperative societies, and post offices deduct TDS before
crediting FD interest if the interest earned crosses specified
thresholds.
- TDS Deduction Limits (FY 2025-26):
- Senior Citizens: ₹1,00,000
(Under Section 194A)
- Other Individuals: ₹50,000
(Under Section 194A)
- TDS Rate:
- 10% if PAN is available and active.
- 20% if PAN is not available or inactive (As
per Section 206AA).
- TDS deducted can be adjusted against total
tax liability while filing ITR.
4. Advance Tax on FD Interest
- If total tax liability exceeds ₹10,000, taxpayers must pay
advance tax in four installments.
- Senior citizens (60+ years) without business income are exempt from
advance tax; they can pay tax at the time of
filing ITR.
5. Reporting of FD Interest in ITR
- FD interest must be reported under Income
from Other Sources in the ITR.
- Even if TDS is deducted, interest income should be fully
disclosed.
- If total income exceeds ₹50 lakh, FD amounts should also be
reported under Assets and Liabilities Schedule in ITR.
6. Key Considerations
- FD interest is taxable as per individual slab rates.
- TDS applies if interest crosses limits; submission of
Form 15G/15H can help avoid TDS deduction.
- Advance tax is required for individuals with high
interest earnings.
- Senior citizens get tax benefits under Section
80TTB.
- High-value FD transactions (above ₹10 lakh) are reported to the Income Tax Department under Annual Information Return
(AIR).
Understanding the taxation rules for FD interest ensures proper tax
compliance and prevents penalties or tax notices from the Income Tax
Department.
Reporting of FD Interest to Income Tax
Department
1. TDS Reporting
- Banks/Post Offices deduct and report TDS if interest exceeds
₹40,000 (₹50,000 for seniors).
- Form 16A is issued for deducted TDS.
2. Annual Information Return (AIR)
- Banks report high-value FDs (above ₹10 lakh) to the Income
Tax Department.
3. Example: AIR Reporting
|
Bank |
FD Amount (₹) |
AIR Reporting? |
ITR Reporting? |
|
ICICI |
11,00,000 |
Yes |
Yes |
|
ICICI |
5,00,000 |
No |
Yes |
|
SBI |
6,00,000 |
No |
Yes |
Key Takeaways:
- Fixed Deposit (FD) interest is considered taxable income and must be reported in ITR.
- TDS (Tax Deducted at Source) applies when interest
income exceeds prescribed thresholds.
- Senior citizens enjoy special benefits like a higher
TDS exemption limit and a deduction under Section 80TTB.
- Form 15G/15H can be submitted to avoid TDS
deduction if total income falls below the taxable limit.
- Banks and post offices report high-value FDs (above ₹10 lakh) to the Income Tax Department via the Annual
Information Return (AIR).
- PAN is mandatory for lower TDS rates; otherwise, a
higher TDS rate of 20% is applied under Section 206AA.
- Advance tax payments may be required if total tax
liability exceeds ₹10,000, except for senior citizens without business
income.
- Correct ITR reporting is crucial to claim TDS
credits and avoid penalties.
- FD interest is taxable as per slab rates.
- TDS is deducted if interest crosses limits.
- Senior citizens get benefits under Section
80TTB.
- Form 15G/15H can prevent TDS deduction.
- High-value FDs are reported to the IT
Department.