FD & Savings Must Know for FD Holders June 2026 · Karthik, Vijayawada AP · 8 min read

How to Calculate Tax on FD Interest 2026 TDS, Form 15G, 15H Explained

Complete guide to tax on FD interest 2026. When TDS is deducted, how to submit Form 15G/15H to avoid TDS, Section 80TTB for seniors, legal ways to minimize FD tax.

How FD Interest is Taxed in India 2026

FD interest = added to your total income = taxed at your income slab rate. Not at a flat rate. If you earn ₹15L salary and ₹1L FD interest → total ₹16L income → FD interest taxed at 30% (the marginal rate applicable).

TDS Rules on FD — 2026

Category	TDS Threshold/Year/Bank	TDS Rate	Without PAN
Regular individual (below 60)	₹40,000	10%	20%
Senior citizen (60-79 years)	₹50,000	10%	20%
Very senior (80+)	₹50,000	10%	20%

Important: TDS is per bank, not total across all banks. Three banks each with ₹38,000 interest = NO TDS from any bank, even though total = ₹1,14,000.

Form 15G and 15H — How to Avoid TDS Legally

Form	Who Submits	Condition	When
Form 15G	Below 60 years	Total income below taxable limit (₹2.5L)	Start of each financial year (April)
Form 15H	60+ years (senior citizens)	Tax liability is zero for the year	Start of each financial year (April)

Submit at EVERY bank where you have FDs — online via internet banking or physically at branch. Valid for one financial year — renew every April.

Section 80TTB — Senior Citizen Interest Deduction

Individuals 60+ can deduct up to ₹50,000/year from bank FD interest, savings account interest, and Post Office interest under Section 80TTB. Old Tax Regime only. Senior citizen with ₹3L salary + ₹50K FD interest: Gross income ₹3.5L - standard deduction ₹50K - 80TTB ₹50K = ₹2.5L taxable → Zero tax!

FAQs

I earn ₹5 lakh from FD interest. How much tax? +

If ₹5L FD interest is your ONLY income: Below taxable limit → Zero tax (submit 15G to avoid TDS). If you also have ₹15L salary: ₹20L total income → ₹5L interest taxed at 30% → ₹1,56,000 tax on FD interest alone. Always consider total income, not FD interest alone.

Post Office FD interest — is TDS deducted? +

No, Post Office does NOT deduct TDS. But you MUST declare Post Office FD interest in ITR under "Other Income." IT Department gets data from Post Office. Not declaring = tax evasion risk. Many people mistakenly think PO FD is tax-free — only PPF, SSY, and SCSS (up to limit) get exemptions.