Fixed deposits are a popular way to save in India. But the interest you earn is taxable, and banks deduct tax at source (TDS) when interest crosses a limit. Many savers whose total income is below the taxable limit can avoid this deduction by submitting Form 15G or Form 15H. Here is how it works.
When is TDS deducted
Banks deduct TDS when the total interest paid to a depositor in a financial year crosses a set limit. The Union Budget 2025 raised these limits from 1 April 2025:
- For depositors below 60 years: Rs 50,000 a year from a bank, cooperative bank or post office.
- For senior citizens: Rs 1 lakh a year.
The limit is checked across all deposits you hold with the same bank, not branch by branch.
TDS rate
- 10 percent if you have given your PAN to the bank.
- A higher rate, generally 20 percent, if PAN is not given.
TDS is not a final tax. It is adjusted against your total tax liability when you file your return. If too much was deducted, you can claim a refund.
What is Form 15G
Form 15G is a self declaration that your total income for the year is below the basic exemption limit, so no tax is payable. It can be submitted by:
- Resident individuals below 60 years.
- Hindu Undivided Families (HUFs).
Also Read: Sukanya Samriddhi Account: Rules, Deposit Limits, Tax Benefits and When the Money Can Be Withdrawn | Which ITR Form Should You File? ITR-1 to ITR-7 Explained Simply for Taxpayers
What is Form 15H
Form 15H is meant for resident senior citizens aged 60 years or more. A senior citizen can submit it if the tax on their estimated total income for the year is nil.
How to submit
- Log in to your net banking and look for the Form 15G/15H option, or visit your branch.
- Fill in your PAN, estimated income and details of deposits.
- Submit it at the start of each financial year, before the first interest is credited.
- Submit a separate form to each bank where you hold deposits.
Important cautions
- Submitting a false declaration is an offence under tax law. Use these forms only if your income is truly below the limit.
- If you have already earned interest before submitting, the bank may have deducted TDS. You can claim it back through your return.
- Check Form 26AS or the Annual Information Statement (AIS) on the e-filing portal to see the TDS deducted.
New Income-tax Act
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Section numbers and some form names have changed under the new law. Always check the latest forms and limits on the official Income Tax Department website before you submit.
Bottom line
If your income is below the taxable limit, Form 15G or 15H can stop banks from deducting TDS on your FD interest. Submit it early each year and keep track of deductions in your AIS.
Source / स्रोत: Income Tax Department, Central Board of Direct Taxes, Press Information Bureau
