TDS on Interest (other than securities): Section 194A
Once payments to one payee cross ₹50,000 in a financial year, 10% comes off before the money moves. Here's the whole rule, with a calculator.
The rate right now · TY 2026-27
| Rates | 10% Bank / post-office deposit interest (general) 10% Deposit interest (senior citizens) |
|---|---|
| Annual threshold | ₹50,000 Bank / post-office deposit interest (general) ₹1,00,000 Deposit interest (senior citizens) Threshold raised from ₹40,000 by Finance Act 2025. Senior citizens: ₹1,00,000. |
| Effective from | 1 April 2025 |
| Who deducts | Banks, co-operative societies, post offices and other payers of interest. |
| Who's covered | Resident depositors and lenders. |
| Under the Act 2025 | Interest TDS is consolidated into the Section 393 payment-code table of the 2025 Act. |
Rates per Section 194A, Income-tax Act 1961, as amended by the Finance Act, 2025 · verified 1 July 2026
Work out the TDS on a payment
TDS to deduct at 10%
₹12,000
The split
| Payment for the year | ₹1,20,000 |
| TDS @ 10% | − ₹12,000 |
| Net receipt | ₹1,08,000 |
Once the year's total crosses the threshold, TDS applies to the whole amount, not just the part above it. Without the payee's PAN, deduction jumps to 20% under the higher-of rule. Threshold raised from ₹40,000 by Finance Act 2025. Senior citizens: ₹1,00,000. Runs in your browser; nothing is stored.
Rate history
| Period | Rate | Threshold | Set by |
|---|---|---|---|
| From 1 Apr 2025Current | 10%Bank / post-office deposit interest (general) | ₹50,000 | Finance Act, 2025† |
| From 1 Apr 2025Current | 10%Deposit interest (senior citizens) | ₹1,00,000 | Finance Act, 2025† |
Effective-dated from Finance Acts as notified in the Gazette of India · sources below
How Section 194A TDS works
TDS flips the collection point. Instead of the person earning the money paying tax months later, the payer holds back 10% at the moment of payment and deposits it with the government against the payee's PAN. The payee sees that credit in their Form 26AS and settles only the balance when they file. Here's how that plays out under Section 194A:
- Who deducts. Banks, co-operative societies, post offices and other payers of interest.
- Who's on the receiving end. Resident depositors and lenders.
- When it triggers. At credit or payment, whichever comes first. Once the year's running total for a payee crosses ₹50,000, tax comes off the whole amount, not just the part above the line.
- Deposit by the 7th. Tax deducted in a month must reach the government by the 7th of the next month, through challan ITNS-281. March deductions get until 30 April.
- Report and certify. Non-salary deductions go into the quarterly Form 26Q return, and the payee gets a Form 16A certificate to match against their Form 26AS and AIS.
The section runs both ways. If you're the one being paid, this is why your money arrives 10% light. The deduction isn't extra tax, it's an advance against your final bill. Check your Form 26AS each quarter and claim the credit in your return; it's your money, already sitting with the government.
Where Section 194A trips people up
- Form 15G/15H stops deduction when total income is below taxable limits.
- Savings-account interest attracts no TDS.
Sources
- Finance Act, 2025†Official text (CBDT) · archived copy
† pending CA verification against the Finance Act 2025 text.
Section 194A: questions people actually ask
How much bank FD interest is TDS-free?
Up to ₹50,000 a year (₹1,00,000 for senior citizens). Above that, banks deduct 10%, or 20% if PAN isn't on file.