FD Tax Rules India 2026: TDS, 80TTB, Form 121 & Saving Tax · Complete Guide

FD Tax Rules India 2026: Under the Income Tax Act, 2025 (effective April 1, 2026), TDS on FD interest is governed by Section 393, replacing the old Section 194A. Banks deduct TDS at 10% (20% without PAN) if interest exceeds ₹50,000 per financial year for non‑seniors, or ₹1,00,000 for senior citizens aged 60+. Senior citizens can claim a ₹50,000 deduction under Section 80TTB (old regime only), while non‑seniors can claim ₹10,000 under Section 80TTA on savings interest. The new Form 121 replaces Forms 15G and 15H as a unified, age‑neutral declaration to avoid TDS. Use INDwallet’s FD Calculator and Tax Simulator to see your exact post‑tax maturity.

AI Summary: FD Tax Rules India 2026

• TDS Thresholds: ₹50,000 for non‑seniors, ₹1,00,000 for senior citizens, per bank per financial year. TDS rate is 10% with PAN, 20% without.
• Section 80TTB: Senior citizens can deduct up to ₹50,000 of FD interest from taxable income — but only under the old tax regime.
• Form 121: Effective April 1, 2026, this unified form replaces both Form 15G (non‑seniors) and Form 15H (seniors). Submit it to avoid TDS when total tax liability is nil.
• New Regime: No 80TTA/80TTB deductions, but income up to ₹12 lakh attracts zero tax due to the Section 156 rebate.
• Use the interactive calculator below and the FD Calculator to plan your post‑tax returns.

🧮 Interactive FD Tax Calculator

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1. TDS on FD Interest: Thresholds and Rates (2026)

Under Section 393 of the Income Tax Act, 2025 — which replaces the old Section 194A — banks and NBFCs must deduct TDS on FD interest when it crosses the annual threshold per bank. The Income Tax Department clarified in April 2026 that despite the renumbering of provisions, existing thresholds and treatment remain the same[reference:0]. The TDS is deducted at 10% if PAN is provided, and at 20% if PAN is not linked. The threshold limits are:

Crucially, TDS is applied on the entire interest amount, not just the excess above the threshold. For example, if a non‑senior earns ₹80,000 interest in a year, TDS is deducted on the full ₹80,000 (₹8,000 at 10%), not just the ₹30,000 that exceeds the ₹50,000 threshold[reference:1].

2. Section 80TTA and 80TTB: Interest Deductions Explained

Section 80TTA (for non‑seniors): You can claim a deduction of up to ₹10,000 on interest earned from savings accounts held with banks, co‑operative societies, and post offices. This deduction is only for savings account interest — not FD or RD interest[reference:2].

Section 80TTB (for senior citizens aged 60+): You can claim a deduction of up to ₹50,000 on all interest income from deposits — savings accounts, fixed deposits, recurring deposits, and post office deposits combined. This is a significantly more valuable benefit available exclusively to senior citizens[reference:3]. Both 80TTA and 80TTB are available only under the old tax regime. Under the new tax regime, these deductions are not available[reference:4].

Read our FD vs PPF India 2026 guide to compare tax‑efficient savings options.

3. Form 121: The New TDS Exemption Declaration (Replaces 15G/15H)

From April 1, 2026, Form 121 replaces both Form 15G (for non‑seniors) and Form 15H (for senior citizens) under the new Income Tax Act, 2025. This is a unified, PAN‑based, age‑neutral self‑declaration that allows taxpayers to request banks and financial institutions not to deduct TDS on their FD interest — provided the estimated total tax liability for the year is nil[reference:5][reference:6].

Key points about Form 121:

• Who can file: Resident individuals whose estimated total tax is nil. Senior citizens are exempt from the ₹4,00,000 aggregate income cap that applies to non‑seniors[reference:7].
• Where to submit: Separately to each bank or deductor — the form is per income source[reference:8].
• Mandatory PAN: PAN must be linked to your bank account. Without PAN, banks will deduct TDS at 20% regardless of the declaration[reference:9].
• Coverage: Covers TDS on bank deposits, post office schemes, bonds, dividends, and EPF withdrawals[reference:10].

If you miss submitting Form 121 and TDS is deducted, you can still claim it back by filing your ITR. However, this ties up your funds for months. Submit Form 121 as early as possible each financial year.

4. Old vs New Tax Regime: Which Saves More on FD Interest?

The choice of tax regime significantly affects how your FD interest is taxed. Here is a side‑by‑side comparison:

Under the new tax regime, if your total income (including FD interest) is below ₹12 lakh, you pay zero tax due to the Section 156 rebate. For higher‑income individuals, the old regime with 80TTB/80TTA deductions may yield lower tax outgo. Use the Tax Regime Simulator to find your best option.

5. Tax‑Saving FDs under Section 80C

A 5‑year tax‑saving fixed deposit allows you to claim a deduction of up to ₹1,50,000 under Section 80C. However, it comes with a strict 5‑year lock‑in — no premature withdrawals are permitted. Only the invested principal qualifies for the 80C deduction; the interest earned remains fully taxable[reference:11]. As of May 2026, small finance banks like Suryoday SFB offer up to 7.90% on tax‑saving FDs, while major banks offer 6‑7.25%[reference:12].

Tax‑saving FDs suit risk‑averse investors who want guaranteed returns, are comfortable with the lock‑in, and need to reduce their taxable income under 80C. Read our guide on Best FD Rates India 2026 for the latest bank‑wise rates.

6. Zero Tax, Zero TDS: A Practical Strategy for FD Investors

For many investors, it is possible to earn FD interest without paying any tax or facing TDS. The strategy involves two key conditions[reference:13]:

• Condition 1: Keep the FD interest in any one bank below the TDS threshold — ₹50,000 for non‑seniors or ₹1,00,000 for senior citizens. Spread large deposits across multiple banks.
• Condition 2: Ensure your total income (including FD interest) stays within ₹12 lakh under the new regime, or claim the 80TTB/80TTA deduction under the old regime to bring taxable income below the exemption limit.

For example, a senior citizen with ₹10 lakh in FDs spread across two banks, earning ₹95,000 interest from each (total ₹1,90,000), will face zero TDS at either bank. Under the old regime, they can claim ₹50,000 under 80TTB, reducing taxable interest to ₹1,40,000. If their total income remains below ₹3 lakh, they pay zero tax. Submit Form 121 at the start of the year to prevent TDS altogether.

7. Common FD Tax Mistakes to Avoid

8. INDwallet Tools to Optimise Your FD Tax

• FD Calculator – See exact maturity, interest, TDS, and post‑tax returns instantly.
• Tax Regime Simulator – Compare old vs new regime side‑by‑side with your FD interest included.
• Wealth Wallet – Track all your FDs, interest income, TDS, and overall net worth in one free dashboard.