You booked a ₹6 lakh FD at 7.25%, expecting ₹43,500 of interest. At year-end the bank credited less than you calculated. Nothing went wrong — the bank deducted TDS (Tax Deducted at Source) because your interest crossed the threshold. Here is exactly how the rules work, and the two forms that stop the deduction legally.
When Banks Deduct TDS on FD Interest
| Depositor | Threshold (interest per bank, per FY) | TDS Rate |
|---|---|---|
| Regular (below 60) | ₹40,000 | 10% |
| Senior citizen (60+) | ₹50,000 | 10% |
| Any depositor, PAN not linked | same thresholds | 20% |
- The threshold applies to your total interest across all branches of one bank — splitting between branches doesn't help; splitting between banks does.
- TDS applies on accrued interest each year, even for cumulative FDs where you receive nothing until maturity — a genuine cash-flow sting.
- Estimate your interest before booking with the FD calculator — it flags whether you'll cross the TDS threshold.
Form 15G: For Non-Seniors with Low Income
Form 15G is a self-declaration that your income is below the taxable limit, instructing the bank not to deduct TDS. You qualify only if both conditions hold:
- Your total taxable income is below the basic exemption limit (effectively ₹4 lakh under the new regime for FY 2025-26), and
- Your total interest income for the year is below that same exemption limit.
Typical eligible filers: students with FD gifts, homemakers with deposits in their name, early retirees below the threshold, and anyone on a career break.
Form 15H: The Senior Citizen Version
Form 15H (for 60+) has a single, softer condition: your final tax liability for the year is nil — even if your interest income alone exceeds the exemption limit. A senior with ₹6.5 lakh of total income that becomes tax-free after the Section 87A rebate can validly file 15H. Combined with the ₹50,000 senior TDS threshold and senior FD rates (+0.50% at most banks), retirees have real room to keep the full payout.
Submission Rules That Trip People Up
- Submit in April, at the start of the financial year — TDS already deducted before you file the form will not be reversed by the bank.
- Every bank, every year. The forms lapse each 31 March and cover only the bank you filed them with. Most banks now accept them in net banking in under two minutes.
- False declarations are prosecutable under Section 277. If you genuinely expect tax liability, skip the form — the TDS route with an ITR refund is the honest path.
Deducted Anyway? Claim It Back
- Check Form 26AS / AIS — every rupee of bank TDS appears there against your PAN.
- File your ITR; the TDS offsets your final tax liability rupee-for-rupee.
- If your final liability is lower than TDS paid, the excess comes back as a refund with interest (Section 244A), typically weeks after e-verification.
Or Sidestep TDS Entirely
Interest on PPF is exempt — no TDS, no tax, ever (see the PPF calculator). Debt or equity funds have no yearly TDS for residents — tax applies only when you redeem. For long horizons, the post-tax gap between FDs and alternatives is bigger than most savers think: the SIP vs FD comparison puts numbers on it.