TDS on FD interest in 2026 has two major changes every fixed deposit holder in India must know — the threshold has been raised to ₹50,000 for general citizens and ₹1 lakh for senior citizens, and the familiar Form 15G and Form 15H are being replaced by a single new Form 121 from April 1, 2026. Understanding TDS on FD interest 2026 rules correctly can save you thousands in unnecessary tax deductions — and avoid the hassle of claiming refunds while filing your ITR. This complete guide explains the TDS on FD interest 2026 rules in plain language — who it applies to, how much gets deducted, how to avoid TDS legally, and the step-by-step process for submitting the new Form 121.
The TDS on FD interest 2026 framework under Section 194A of the Income Tax Act has been updated as part of Budget 2025 changes effective April 1, 2025. The TDS on FD interest 2026 rate remains 10% if PAN is provided — or 20% without PAN. What changed is the threshold — TDS on FD interest 2026 now kicks in only above ₹50,000 annual interest for regular citizens (up from ₹40,000) and ₹1 lakh for senior citizens (up from ₹50,000). The TDS on FD interest 2026 rules also introduce Form 121 — a single unified self-declaration replacing both 15G and 15H — which makes it simpler for eligible depositors to prevent TDS deduction at source without waiting to claim a refund.
TDS on FD Interest 2026 — Complete Guide to New Limits, Form 121 and Tax Saving
- TDS threshold raised from April 1, 2025: General citizens — ₹50,000 per year (was ₹40,000). Senior citizens (60+) — ₹1,00,000 per year (was ₹50,000). TDS is deducted only if your annual FD interest exceeds these limits.
- TDS rate is 10% if PAN is provided. If PAN is not linked to your FD — rate jumps to 20%. Always ensure PAN is updated with your bank.
- Form 121 replaces Form 15G and 15H from April 1, 2026. One unified form for all eligible depositors to prevent TDS deduction if total income is below the taxable limit.
- TDS is calculated across all branches of the same bank — not per branch. CBS (Core Banking System) aggregates all FD interest from all branches together before applying the threshold.
- TDS deducted is not final tax. It is only an advance deduction. You can claim full refund while filing ITR if your total income is below the taxable limit.
Every year, millions of Indian FD holders are surprised when they see TDS deducted from their interest — often because they were unaware of the threshold or forgot to submit the right form. With two significant changes in 2025–26, understanding TDS on FD interest 2026 correctly can save you real money and hours of refund paperwork.
What Changed in TDS on FD Interest 2026 — Old vs New Rules
| Rule | Before April 2025 (Old) | From April 2025 (New 2026) |
|---|---|---|
| TDS threshold — General citizens (below 60) | ₹40,000/year | ₹50,000/year |
| TDS threshold — Senior citizens (60+) | ₹50,000/year | ₹1,00,000/year |
| TDS rate (PAN provided) | 10% | 10% (unchanged) |
| TDS rate (no PAN) | 20% | 20% (unchanged) |
| Self-declaration form | Form 15G (general) / Form 15H (senior) | Form 121 (unified — from April 1, 2026) |
| Form validity | 1 financial year | 1 financial year (same) |
| Calculation method | All branches of same bank combined | All branches of same bank combined (same) |
How TDS on FD Interest 2026 is Actually Calculated — Real Examples
Example 1 — General Citizen (Below 60)
| Scenario | Annual FD Interest | TDS Deducted | Reason |
|---|---|---|---|
| Ravi, 35 years, PAN linked | ₹45,000 | ₹0 | Below ₹50,000 threshold — no TDS |
| Priya, 42 years, PAN linked | ₹75,000 | ₹7,500 (10%) | Exceeds ₹50,000 — 10% on full ₹75,000 |
| Amit, 38 years, NO PAN | ₹55,000 | ₹11,000 (20%) | No PAN — 20% rate applies |
Example 2 — Senior Citizen (60+)
| Scenario | Annual FD Interest | TDS Deducted | Reason |
|---|---|---|---|
| Mrs. Sharma, 65 years, PAN linked | ₹90,000 | ₹0 | Below ₹1 lakh threshold — no TDS |
| Mr. Gupta, 68 years, PAN linked | ₹1,50,000 | ₹15,000 (10%) | Exceeds ₹1 lakh — 10% on full ₹1.5L |
| Mrs. Patel, 72 years, NO PAN | ₹1,10,000 | ₹22,000 (20%) | No PAN — 20% regardless of age |
TDS on FD Interest Calculator 2026
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Based on Section 194A rules effective April 1, 2025
New Form 121 — Replaces Form 15G and 15H from April 1, 2026
This is the most important change in TDS on FD interest 2026 that most people have not heard about yet. The Income Tax Department has introduced Form 121 — a single unified self-declaration form that replaces both Form 15G (for general citizens) and Form 15H (for senior citizens).
| Feature | Old System (till March 2026) | New Form 121 (from April 2026) |
|---|---|---|
| Who submits which form | 15G for under 60 / 15H for 60+ | Single Form 121 for everyone |
| Purpose | Prevent TDS if income below taxable limit | Same purpose — prevent TDS deduction |
| Eligibility (old regime) | Total income below ₹2.5 lakh | Total income below ₹2.5 lakh |
| Eligibility (new regime) | Total income below ₹3 lakh | Total income below ₹4 lakh (raised) |
| Submission method | Physical + online | Online only (faster, simpler) |
| When to submit | Start of financial year | Start of financial year (same) |
| Valid for | 1 financial year | 1 financial year (same) |
Who Should Submit Form 121 to Avoid TDS on FD Interest 2026
| Your Situation | Should You Submit Form 121? | Benefit |
|---|---|---|
| Total annual income below ₹2.5L (old regime) | ✅ Yes — submit immediately | Zero TDS deducted all year |
| Total annual income below ₹4L (new regime) | ✅ Yes — submit immediately | Zero TDS deducted all year |
| Senior citizen, total income below ₹5L | ✅ Yes — strong candidate | Zero TDS — no refund hassle |
| Income above taxable limit but in 5% slab | ❌ No — not eligible | TDS deducted — claim in ITR |
| Income in 20% or 30% slab | ❌ No — not eligible | TDS is advance tax — no refund |
| Housewife / retired with only FD income | ✅ Likely eligible | Calculate total income first |
How to Submit Form 121 to Your Bank — Step by Step
Download Form 121 from Income Tax portal
Go to incometax.gov.in → Forms → Form 121. This is the new unified form replacing 15G and 15H. Available from April 1, 2026 onwards.
Fill in your details carefully
Name, PAN, address, financial year, estimated total income from all sources. Your estimated FD interest income. Declaration that your total income does not exceed the taxable limit. Sign or e-verify the form.
Submit to your bank — online preferred
Most banks now accept Form 121 through their netbanking portal or mobile app. Log in → FD section → Submit Form 121. For banks without online submission, visit the branch and submit physically. Submit a separate form for each bank where you have FDs.
Submit at the start of every financial year
Form 121 is valid for only one financial year. Submit every April — before your bank processes the first quarter’s FD interest. If you miss it, TDS will be deducted and you will need to claim a refund in your ITR.
Verify in Form 26AS
After submission, check your Form 26AS on the income tax portal to confirm no TDS has been deducted on your FD interest. Form 26AS shows all TDS deducted against your PAN — updated quarterly.
Smart FD Strategy to Manage TDS on FD Interest 2026
If your FD interest is close to the threshold, here are legal strategies to manage TDS:
Strategy 1 — Split FDs Across Different Banks
TDS threshold applies bank-wise — not across all banks. If you have ₹90,000 annual FD interest, splitting it as ₹45,000 from SBI and ₹45,000 from HDFC means neither bank crosses the ₹50,000 threshold — resulting in zero TDS from both. This is completely legal.
Strategy 2 — Invest in Spouse or Senior Parent’s Name
If your spouse or parents are in a lower tax slab or below the taxable limit, investing FDs in their name keeps TDS on FD interest 2026 lower. Each person’s threshold is calculated independently.
Strategy 3 — Use Cumulative FDs Strategically
Cumulative FDs pay interest at maturity — not annually. TDS is deducted when interest is credited. If you plan FD maturities across different financial years, you may be able to keep annual interest below the threshold in any given year.
“The TDS on FD interest 2026 changes are genuinely positive for small depositors and senior citizens. The ₹1 lakh threshold for senior citizens means most retired individuals with moderate FD portfolios will see zero TDS deducted — a significant improvement. The new Form 121 replacing 15G and 15H simplifies compliance. The one action every FD holder should take right now: check if you are eligible for Form 121 and submit it at the start of every financial year. It takes 10 minutes and saves you the hassle of claiming a refund in ITR.”
TDS on FD Interest 2026 — FAQs
Confused About TDS on Your FD Interest?
Ask us your specific TDS question — we will tell you exactly whether you need to submit Form 121 and how much TDS you should expect on your FD portfolio.
📎 Sources:
Income Tax Department — Section 194A ·
Business Standard — Budget 2025 TDS Threshold Hike ·
ClearTax — Form 121 replacing 15G/15H ·
Ujjivan SFB — TDS on FD Interest FY 2025–26.
For informational purposes only. Consult a CA or tax advisor for your specific situation.