When is TDS deducted on FD interest?
Under Section 194A of the Income Tax Act, banks must deduct TDS when your total interest from FDs and RDs at that single bank in a financial year exceeds a threshold:
| Depositor | Annual interest threshold | TDS rate above threshold |
|---|---|---|
| Resident, below 60 | ₹40,000 | 10% (20% if no PAN) |
| Senior citizen (60+) | ₹50,000 | 10% (20% if no PAN) |
| NRI (NRO FD) | None — from rupee one | 30% + surcharge + cess |
Two important details. First, the threshold is per-bank, not per-depositor — if you spread ₹15 lakh across three banks, each one checks the ₹40,000 / ₹50,000 trigger against just your deposits at that bank. Second, TDS is deducted on accrual, not just at maturity payout, which is why a Form 15G/15H submitted late in the year only stops future deductions, not past ones.
Form 15G — what it is
A self-declaration filed under Section 197A(1) and (1A) of the Income Tax Act. By signing it, you're telling the bank that your estimated total income for the financial year falls below the basic exemption limit — so there's no point deducting TDS because your final tax liability would be zero anyway.
Form 15G is available to resident individuals (and HUFs) below 60 years of age. The form has two parts: Part I (your declaration with PAN, estimated income, deposit details) and Part II (the bank fills in its TAN and a Unique Identification Number that gets reported to the Income Tax Department). The blank form lives at incometaxindia.gov.in; most major banks also accept it via net banking.
Form 15H — what it is
The senior-citizen version of 15G, filed under Section 197A(1C). For resident individuals aged 60 and above. The eligibility test is gentler than 15G: you only need to certify that your final tax liability for the year will be NIL — not that your income or interest is below any specific limit. Many seniors who exceed the basic exemption on a gross basis still owe zero tax after the Section 80TTB interest deduction and Section 87A rebate, and 15H lets them stop TDS on that basis.
Eligibility — 15G vs 15H, side by side
| Criterion | Form 15G | Form 15H |
|---|---|---|
| Age | Below 60 | 60 or above |
| Who can submit | Resident individuals + HUFs | Resident individuals only |
| Income test | Total estimated income for the year must be below the basic exemption limit | No income cap — interest can exceed the basic exemption |
| Interest test | Total interest income for the year must be below the basic exemption limit | Not applicable |
| Final-tax test | Implied — both above tests amount to this | Final tax liability for the year must be NIL |
| Residency | Both forms are for tax residents only. NRIs cannot submit either — see the FAQ for what NRIs can do instead. | |
The basic exemption limit depends on your chosen tax regime (old vs new) and changes with each Union Budget. Confirm the current limit against the Income Tax Department's website before submitting. Don't rely on year-old WhatsApp forwards.
When and how to submit
- Timing. Submit at the start of every financial year, ideally in April. Since TDS is deducted on accrual through the year, late submissions only stop future deductions, not past ones.
- Once per bank. Submit one form to each bank where you hold FDs or RDs. Submitting to your home branch does not cover deposits at other banks.
- Once per year. Both forms are valid only for one financial year (April–March). Re-submit each year if you still qualify.
- Online or paper. Most major banks accept the form via net banking — usually under "Service Requests" or "Tax Center." The blank PDF is on the Income Tax Department's downloads page if you prefer paper; submit at the branch with a signed copy.
- Keep the acknowledgement. Online submissions generate a receipt with a UIN — save it. If TDS still appears on your Form 26AS for that bank, the UIN is your evidence to dispute.
What if you didn't submit
TDS at 10% will be deducted (20% if your PAN isn't on file with the bank). The deducted amount is deposited with the Income Tax Department in your name against your PAN. You'll see it on Form 26AS / AIS at the end of the year.
When you file your ITR, the TDS is adjusted against your final tax liability. If your final tax is zero, you claim the full TDS as a refund. The refund usually processes within 2–6 months of filing, sometimes longer. In practical terms — if a bank deducts ₹4,000 of TDS in May, and you file your ITR in July of the following year and the refund processes in October, your money was locked with the government for around 17 months.
So missing Form 15G/15H isn't a permanent loss. It's a one-year-plus interest-free loan to the government. That's the cost — frame it accordingly.
Common mistakes
- Submitting only at one bank. If your FDs are spread across SBI, HDFC, and Post Office, you need three forms. Each bank applies its own threshold.
- Forgetting in April. April–May is the right window. By August, you've already accrued months of interest that have had TDS deducted; the form only helps from the date of submission forward.
- Mis-estimating total income. Form 15G's eligibility test is your total income for the year — salary, rent, dividends, capital gains, other interest, business income. Many people forget non-salary income lines.
- Submitting 15G when 15H applies. If you're 60+, you should be filing 15H, not 15G. The two are not interchangeable; banks reject 15G from senior citizens.
- Assuming joint-holder interest doesn't count. Joint FDs assign interest to the primary holder for tax purposes — it counts in the primary holder's income for the Form 15G/15H test, even if the second holder isn't a taxpayer.
- Skipping NRO FDs. NRO interest is taxed at 30% TDS from rupee one; Form 15G/15H does not apply. NRIs need a DTAA-based Tax Residency Certificate or a Section 197 lower-withholding order instead.
Penalty for false declaration
Form 15G and 15H carry the warning printed on the form itself: a false declaration is an offence under Section 277 of the Income Tax Act. Penalties:
- If tax sought to be evaded is less than ₹1 lakh — three months to two years' imprisonment plus fine.
- If tax sought to be evaded is ₹1 lakh or more — three months to seven years' imprisonment plus fine.
Beyond the criminal exposure, the Department recovers the tax with interest under Sections 234A/B/C, and your future declarations are flagged. The banks themselves don't usually verify income at submission time — but the data is reconciled centrally against your ITR, and mismatches drive scrutiny notices.
If you're uncertain whether you qualify, don't submit. Letting TDS get deducted and claiming a refund through your ITR is the safe path — you pay a cashflow cost but no legal exposure.
Model your FD's pre-tax and post-tax returns in the FD calculator — the tax-slab toggle shows you the after-tax view directly. See also: Types of FDs and FD vs RD .