How Much FD Interest is Tax Free in India 2025?

Many Indians assume their FD returns are "safe" — but don't realise they're paying up to 30% tax on FD interest. Here's everything you need to know.

Is FD Interest Taxable in India?

Yes, FD interest is fully taxable as per your income tax slab. There is no basic exemption on FD interest for regular taxpayers. The only exemptions are for senior citizens under Section 80TTB.

TDS Rules on FD Interest 2025

Scenario	TDS Rate	TDS Threshold
Regular taxpayer	10%	Interest > ₹40,000/year per bank
Senior citizen (60+)	10%	Interest > ₹50,000/year
No PAN card	20%	Any interest

Section 80TTB — Senior Citizen Exemption

Senior citizens (aged 60+) get a special deduction of up to ₹50,000 on interest income from banks, post offices and co-operative societies under Section 80TTB.

How to Avoid TDS — Form 15G and 15H

• Form 15G — For individuals below 60 years whose total income is below taxable limit
• Form 15H — For senior citizens (60+) whose tax liability is nil
• Submit at the start of every financial year to each bank where you have FD

Tax-Efficient Alternatives to FD

Investment	Returns	Tax Status
PPF	7.1% p.a.	Fully tax-free (EEE)
ELSS Mutual Funds	12-18% historical	LTCG up to ₹1L exempt
Sovereign Gold Bonds	2.5% + gold appreciation	Capital gains tax-free on maturity
Tax-free Bonds	5-6% p.a.	Interest fully tax-free