Interest Income Tax Calculator India — FD, Savings & Bonds FY 2025-26

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Reviewed by Toolisky Team|Accuracy verified|Created: Apr 2026|Updated: Apr 2026

Interest Income Tax in India (FY 2025-26) — FD, Savings Account & Bond Interest

Updated: April 2025

This interest income tax calculator helps individuals in India calculate tax on interest earned from fixed deposits, savings accounts, recurring deposits, and bonds for FY 2025-26. Enter your interest income source, annual amount, and age group — and instantly see your taxable amount, applicable TDS rate under Section 194A, deductions under Section 80TTA or 80TTB, and the final tax liability. Designed for salaried individuals, retirees, and senior citizens across India. Accurate, completely private, and free — no signup required.

✓ Updated for FY 2025-26 & Budget 2025✓ Section 194A TDS Calculation✓ 80TTA & 80TTB Deduction Support✓ 100% Private — No Data Stored

What Is Interest Income Tax?

Interest income tax is the income tax payable on interest earned from financial instruments such as fixed deposits (FDs), savings accounts, recurring deposits (RDs), bonds, and loans given to others. Under the Income Tax Act, 1961, this income falls under the head 'Income from Other Sources' — unless it arises directly from your business or profession.

The core rule is simple: almost all interest income is taxable in India, and it is added to your total income and taxed at your applicable slab rate. However, the exact tax you owe depends on your age, the source of interest, the regime you choose (old or new), and whether TDS has already been deducted by your bank.

The basic interest income tax formula:

Tax on Interest Income = (Interest Income − Eligible Deduction) × Applicable Slab Rate + 4% Cess

Example: You earn ₹60,000 in FD interest during FY 2025-26. You are below 60 years of age and under the old tax regime.

— Interest Income: ₹60,000
— Less: Section 80TTA deduction (only on savings account interest, not FD): Not applicable here
— Taxable Interest Income: ₹60,000
— Added to total income and taxed at applicable slab rate

The formula itself is straightforward. What becomes complex is accounting for TDS already deducted under Section 194A, the applicable deduction limit under 80TTA or 80TTB, and the difference in treatment between old and new tax regimes — which is exactly what this interest income tax calculator handles automatically.

How to Calculate Interest Income Tax Manually

Step 1
Identify all sources of interest income for FY 2025-26 — savings accounts, fixed deposits, recurring deposits, post office deposits, bonds, and any loans given to others.
Step 2
Add all interest income together. This is your gross interest income for the year. Note that FD interest accrues each year on an accrual basis — even if you have a 3-year FD that pays at maturity, you must declare the proportionate interest every year.
Step 3
Apply eligible deductions. Under the old tax regime: claim Section 80TTA (up to ₹10,000 on savings account interest only, for individuals below 60) or Section 80TTB (up to ₹50,000 on all deposit interest, for senior citizens aged 60 and above). Under the new tax regime: no deduction under 80TTA or 80TTB is available.
Step 4
Add the remaining taxable interest income to your other income (salary, pension, rental, etc.) and calculate tax as per the applicable slab rate for FY 2025-26. Add 4% Health and Education Cess on the tax amount.
Step 5
Subtract any TDS already deducted by your bank under Section 194A. The resulting figure is the balance tax payable (or the refund you can claim when filing your Income Tax Return).

Practical Example — Senior Citizen with FD and Savings Interest

Age: 65 years (Senior Citizen) | Tax Regime: Old Regime
FD interest income: ₹80,000
Savings bank interest: ₹12,000
Total interest income: ₹92,000
Less: Section 80TTB deduction (max ₹50,000): −₹50,000
Net taxable interest income: ₹42,000

This ₹42,000 is added to other income (pension, etc.) and taxed at applicable slab rates. TDS deducted by the bank under Section 194A is credited while filing the ITR.

This is the standard interest income tax calculation for senior citizens under the old regime. The interest income tax calculator on this page applies this automatically — including TDS threshold checks and deduction limits.

Is Fixed Deposit Interest Taxable? Yes — Here Is How It Works

One of the most searched questions in India is whether FD interest income tax applies — and the answer is clearly yes. Fixed deposit interest is fully taxable in India under both the old and new tax regimes. There is no exemption for FD interest, regardless of the bank, the amount, or the tenure of the deposit.

This applies equally to:
— Bank fixed deposits (public sector and private sector banks)
— Post office time deposits
— Company fixed deposits and NBFC deposits
— Cooperative bank deposits
— Recurring deposits (RDs)

FD Interest Is Taxable on an Accrual Basis

A common misunderstanding is that FD interest is only taxable when received. This is incorrect. Under the Income Tax Act, 1961, interest income must be offered to tax on an accrual basis — meaning it is taxable year by year as it accrues, not just when the FD matures.

If you open a 3-year FD in October 2025, you must declare the proportionate interest accrued up to March 31, 2026 in your FY 2025-26 ITR — even though the bank pays you only at maturity in 2028. This is confirmed by the Income Tax Department of India in its official guidelines.

The interest income tax calculator above accounts for annual accrual automatically when you enter yearly interest figures.

TDS on Interest Income — Section 194A (FY 2025-26 Updated Limits)

Section 194A of the Income Tax Act, 1961 governs TDS on interest income other than interest on securities. Banks, post offices, cooperative societies, and other institutions deduct TDS when the total interest paid or credited to a taxpayer in a financial year crosses the prescribed threshold.

Budget 2025 raised the TDS thresholds under Section 194A significantly, effective April 1, 2025.

For banks, post offices, and cooperative banks:
— General taxpayers (below 60 years): TDS is deducted only if interest exceeds ₹50,000 per year (raised from ₹40,000)
— Senior citizens (60 years and above): TDS is deducted only if interest exceeds ₹1,00,000 per year (raised from ₹50,000)

For other entities (companies, NBFCs, trusts, etc.):
— TDS threshold is ₹10,000 per year for all taxpayers.

TDS Rate Under Section 194A:
— 10% if valid PAN is provided to the bank. Verify your PAN details using the PAN card validator.
— 20% if PAN is not provided
— No surcharge or cess is added to the TDS rate

Important: The threshold applies per bank, per financial year — not across all banks combined. A general taxpayer with FDs at two banks earning ₹48,000 from each will have no TDS deducted by either bank. However, the total ₹96,000 interest is still fully taxable and must be reported in the ITR.

If your bank has deducted TDS, you can view and verify the amounts in Form 26AS or your Annual Information Statement (AIS) on the official Income Tax portal. TDS credit is adjusted against your final tax liability when you file your ITR. Excess TDS results in a refund.

Section 194A TDS Threshold — FY 2025-26 vs FY 2024-25

Budget 2025 revised Section 194A limits to reduce the TDS compliance burden, particularly for senior citizens who depend on fixed deposit income. Here is a direct comparison:

Taxpayer Category	Payer	Old Threshold (FY 2024-25)	New Threshold (FY 2025-26)
General (below 60 years)	Banks / Post Offices / Co-op Banks	₹40,000	₹50,000
Senior Citizens (60+ years)	Banks / Post Offices / Co-op Banks	₹50,000	₹1,00,000
All Taxpayers	Other Entities (Companies, NBFCs)	₹5,000	₹10,000

This threshold applies per financial institution, per year. Even if no TDS is deducted because your interest is below the threshold, the interest is still fully taxable and must be reported in your Income Tax Return under 'Income from Other Sources.'

Senior citizens earning up to ₹1,00,000 in bank FD interest can now receive this income without TDS deduction — though the taxable amount after the Section 80TTB deduction of ₹50,000 is what ultimately matters for their final tax liability. Use the interest income tax calculator above to see exactly how much tax applies after all eligible deductions.

Form 15G and Form 15H — How to Prevent TDS on FD Interest

If your total income for FY 2025-26 is below the taxable threshold, you can submit a self-declaration to your bank to prevent TDS deduction on your FD interest income:

Form 15G — For individuals and HUFs below 60 years of age whose estimated total income for the year is nil or below the basic exemption limit. Both conditions must be met: (1) your estimated tax liability must be zero, and (2) total interest income must not exceed the basic exemption limit.

Form 15H — For senior citizens aged 60 and above whose estimated total income results in zero tax liability after all deductions and exemptions. Unlike 15G, there is no condition on interest income not exceeding the basic exemption limit.

Submit these forms at the start of the financial year — before the first interest credit. If TDS is already deducted, you can only recover it by filing an ITR and claiming a refund. Submit Form 15G or 15H to every bank separately where you hold fixed deposits. Download both forms directly from the official Income Tax portal.

Section 80TTA — Savings Account Interest Deduction (Non-Senior Citizens)

Section 80TTA of the Income Tax Act, 1961 provides a deduction of up to ₹10,000 per financial year on interest earned from savings bank accounts. This is a targeted benefit to encourage savings among individuals and HUFs.

Key rules under Section 80TTA:
— Available to: Individuals and Hindu Undivided Families (HUFs) below 60 years of age
— Maximum deduction: ₹10,000 per financial year
— Covers: Savings account interest from banks, cooperative societies engaged in banking, and post offices
— Does NOT cover: Fixed deposit interest, recurring deposit interest, or any time deposit interest
— Tax Regime: Available only under the old tax regime — not available under the new tax regime
— For senior citizens: Section 80TTA does not apply. Senior citizens must use Section 80TTB instead.

How it works in practice:

If your savings bank interest is ₹7,500 for FY 2025-26, the entire ₹7,500 is exempt. If your savings interest is ₹14,000, only ₹10,000 is exempt and the remaining ₹4,000 is added to taxable income.

This deduction does not apply to FD interest. If you earn ₹30,000 in FD interest and ₹8,000 in savings interest, you can claim ₹8,000 under 80TTA (not ₹10,000, since actual savings interest is ₹8,000). The FD interest of ₹30,000 remains fully taxable.

Note: Section 80TTA is available even to NRI individuals holding NRO savings accounts. NRE savings account interest is separately exempt under Section 10(4) and does not need 80TTA. If you earn interest from overseas accounts, also see the foreign interest income tax calculator.

Section 80TTB — Higher Deduction for Senior Citizens (₹50,000 on All Deposit Interest)

Section 80TTB is a special deduction available exclusively to senior citizens aged 60 years and above. It allows a deduction of up to ₹50,000 per financial year on interest income from deposits — covering a much wider range of interest sources than Section 80TTA.

Unlike 80TTA, which only covers savings account interest, Section 80TTB covers:
— Savings account interest
— Fixed deposit interest
— Recurring deposit interest
— Post office deposit interest
— Cooperative society deposit interest

This makes Section 80TTB far more valuable for retired individuals who rely primarily on fixed deposit income for monthly expenses. A senior citizen earning ₹80,000 in FD interest and ₹15,000 in savings interest (total ₹95,000) can claim the full ₹50,000 deduction under 80TTB, bringing the taxable interest income to ₹45,000.

Key rules under Section 80TTB:
— Available to: Resident senior citizens aged 60 years and above
— Maximum deduction: ₹50,000 per financial year
— Available only under the old tax regime — not under the new tax regime
— You cannot claim both 80TTA and 80TTB. Senior citizens should always use 80TTB since it covers all deposit interest and offers a much higher limit.
— Super senior citizens (above 80 years) are equally eligible for Section 80TTB.

For a complete comparison, use the old vs new tax regime calculator to see whether the old regime or new regime results in lower overall tax, especially when 80TTB deductions are factored in.

Section 80TTA vs Section 80TTB — Complete Comparison

Understanding the difference between 80TTA and 80TTB is essential for calculating interest income tax accurately. Here is a side-by-side comparison:

Feature	Section 80TTA	Section 80TTB
Who Can Claim	Individuals & HUFs below 60 years	Resident Senior Citizens (60+ years)
Maximum Deduction	₹10,000 per year	₹50,000 per year
Savings Account Interest	Covered	Covered
Fixed Deposit Interest	NOT covered	Covered
Recurring Deposit Interest	NOT covered	Covered
Post Office Deposit Interest	NOT covered	Covered
Available Under Old Regime	Yes	Yes
Available Under New Regime	No	No
Can Both Be Claimed Together?	No — mutually exclusive	No — mutually exclusive

Senior citizens should always claim Section 80TTB over 80TTA — the deduction limit is five times higher and covers all deposit interest including FDs, which is typically the primary source of retirement income. Use the interest income tax calculator above to verify your applicable deduction and final tax liability in seconds.

Interest Income Tax Treatment by Source — FY 2025-26

Different interest income sources are treated differently under the Income Tax Act. Here is a complete overview of taxability, TDS applicability, and available deductions:

Source of Interest Income	Taxable?	TDS Under	Deduction Available
Savings Bank Account	Yes — slab rate	No TDS on savings interest	80TTA (₹10,000) / 80TTB (₹50,000)
Bank Fixed Deposit (FD)	Yes — slab rate	Section 194A	80TTB only (senior citizens)
Recurring Deposit (RD)	Yes — slab rate	Section 194A	80TTB only (senior citizens)
Post Office Time Deposit	Yes — slab rate	Section 194A	80TTB only (senior citizens)
Corporate Bonds / Debentures	Yes — slab rate	Section 193	None
Government Tax-Free Bonds	No — fully exempt	No TDS	Not required — income is exempt
PPF Account	No — fully exempt	No TDS	Not required — EEE status
Sukanya Samriddhi Yojana	No — fully exempt	No TDS	Not required — government exempt
NRE Account (Savings / FD)	No — fully exempt	No TDS for NRI status	Exempt under Section 10(4)
NRO Account	Yes — taxable	30% flat TDS (Section 195)	Subject to DTAA benefits

Tax-free interest income sources such as PPF, Sukanya Samriddhi Yojana, and government-notified tax-free bonds are confirmed exempt by the Income Tax Department of India. Even exempt interest income must be disclosed in Schedule EI (Exempt Income) of your ITR. Non-disclosure can trigger a scrutiny notice even when no tax is due. If you earn interest from foreign bank accounts or overseas deposits, use the foreign interest income tax calculator for the applicable tax treatment.

New vs Old Tax Regime — How Your Choice Affects Interest Income Tax

The tax regime you choose for FY 2025-26 has a direct impact on how much income tax you pay on interest income. From FY 2023-24 onwards, the new tax regime is the default. If you do not actively opt for the old regime at the time of filing your ITR, the new regime applies automatically.

New Tax Regime (Default for FY 2025-26):
— No deduction under Section 80TTA or 80TTB
— FD interest, savings interest, RD interest — all fully taxable at slab rates
— Section 87A rebate raised to ₹60,000 (making income up to ₹12,00,000 tax-free for eligible individuals after the ₹75,000 standard deduction)
— Revised slab structure with lower rates across all slabs

New Regime Tax Slabs for FY 2025-26 (AY 2026-27):

Up to ₹4,00,000 — Nil
₹4,00,001 to ₹8,00,000 — 5%
₹8,00,001 to ₹12,00,000 — 10%
₹12,00,001 to ₹16,00,000 — 15%
₹16,00,001 to ₹20,00,000 — 20%
₹20,00,001 to ₹24,00,000 — 25%
Above ₹24,00,000 — 30%

Old Tax Regime (Must Opt In Actively):
— Section 80TTA deduction of ₹10,000 on savings account interest (individuals below 60)
— Section 80TTB deduction of ₹50,000 on all deposit interest (senior citizens)
— Higher slab rates compared to the new regime, but multiple deductions available
— Basic exemption limit: ₹2,50,000 (general), ₹3,00,000 (senior citizens), ₹5,00,000 (super senior citizens)

Which regime is better if you earn interest income?

For senior citizens with significant FD income, the old regime is often more beneficial because Section 80TTB offers a ₹50,000 deduction — a substantial reduction in taxable interest income. For younger salaried individuals with moderate interest income and no large deductions, the new regime's lower slab rates may result in lower overall tax.

Use the old vs new tax regime calculator to compare your actual tax under both regimes before making a decision.

Tax-Free Interest Income Sources in India — What Is Fully Exempt?

Public Provident Fund (PPF) — Section 10(11)

PPF interest is completely exempt from income tax under Section 10(11). PPF follows the EEE (Exempt-Exempt-Exempt) structure — contributions qualify for 80C deduction, interest is exempt, and maturity proceeds are also tax-free. The current PPF interest rate for FY 2025-26 is 7.1% per annum, as announced by the Ministry of Finance, Government of India.

Sukanya Samriddhi Yojana (SSY)

Interest on SSY accounts is fully exempt from tax under the scheme rules. Like PPF, SSY also follows the EEE structure. This scheme is available for parents of girl children below 10 years of age and is backed by the Ministry of Finance, Government of India.

Government-Notified Tax-Free Bonds — Section 10(15)

Interest on specifically notified government infrastructure bonds is fully exempt under Section 10(15)(iv)(h) of the Income Tax Act. These bonds are typically issued by entities such as NHAI, REC, PFC, and IRFC when the government specifically notifies them as tax-free. New issuances have been limited in recent years.

NRE Account Interest — Section 10(4)

Interest earned on Non-Resident External (NRE) savings and fixed deposit accounts is fully exempt under Section 10(4) of the Income Tax Act, 1961 — as long as the account holder qualifies as a non-resident under FEMA. Once the person becomes a resident, NRE account interest becomes taxable. For tax on payments from abroad, use the dedicated calculator.

National Savings Certificate (NSC) — Accrual Interest

While NSC interest is technically taxable, the accrued interest (except in the final year) is deemed to be reinvested and qualifies for Section 80C deduction, effectively making it tax-neutral for most taxpayers who are within the 80C limit. The final year's interest, which is received, is taxable with no 80C offset.

Advance Tax on FD Interest — When Does It Apply?

If your total tax liability for FY 2025-26 exceeds ₹10,000 after accounting for TDS, you are required to pay advance tax in quarterly instalments. FD interest income, especially when banks are not deducting TDS (because interest is below the Section 194A threshold), can quickly push your tax liability above this limit.

Advance Tax Due Dates for FY 2025-26:
— 15% of annual tax liability by June 15, 2025
— 45% by September 15, 2025
— 75% by December 15, 2025
— 100% by March 15, 2026

Senior citizens aged 60 and above who do not have any income from business or profession are exempt from paying advance tax under Section 207 of the Income Tax Act — regardless of how large their interest income is.

If advance tax is not paid on time, interest under Section 234B and 234C is charged on the shortfall. The interest income tax calculator shows your estimated annual tax liability, helping you assess whether advance tax is required.

How to Report Interest Income in Your ITR — Step by Step

Step 1 — Collect Interest Income Documents

Gather Form 16A (TDS certificate from your bank), your bank account passbook or FD interest statements, Form 26AS (downloadable from the Income Tax portal), and your Annual Information Statement (AIS). AIS now shows all interest income reported by banks directly to the Income Tax Department.

Step 2 — Report Under 'Income from Other Sources'

In your ITR form (ITR-1 for most salaried individuals; ITR-2 for those with capital gains), enter total interest income — from FDs, RDs, savings accounts, bonds, and loans given to others — under the head 'Income from Other Sources' in the respective schedule.

Step 3 — Claim Deductions Under 80TTA or 80TTB (Old Regime Only)

If you are filing under the old tax regime, claim Section 80TTA deduction (up to ₹10,000 on savings account interest, for those below 60) or Section 80TTB deduction (up to ₹50,000 on all deposit interest, for senior citizens aged 60 and above) in Schedule VI-A of your ITR.

Step 4 — Disclose Exempt Interest in Schedule EI

Even if your interest income is fully exempt (PPF, tax-free bonds, NRE accounts), it must be declared under Schedule EI (Exempt Income) in your ITR. Not disclosing exempt income can trigger a notice even though no tax is due.

Step 5 — Claim TDS Credit and Verify Refund

Credit for TDS deducted by your bank under Section 194A is automatically pre-filled in your ITR from Form 26AS. Verify the amounts match your Form 16A. If TDS exceeds your tax liability, the excess is refunded by the Income Tax Department after processing your return.

Common Mistakes When Calculating Interest Income Tax

Mistake 1: Not Reporting Interest Because TDS Was Not Deducted

Many taxpayers assume that if no TDS was deducted by the bank, no tax is due and no reporting is needed. This is wrong. TDS thresholds under Section 194A determine whether a bank deducts tax at source — they do not determine whether interest is taxable. Even if your FD interest is ₹45,000 and no TDS was deducted (below the ₹50,000 threshold), you must report it in your ITR and pay tax at your slab rate if your total income is above the exemption limit.

Mistake 2: Using Cash Basis Instead of Accrual Basis for FD Interest

Reporting FD interest only when received at maturity — instead of year by year as it accrues — is incorrect. The Income Tax Department receives FD interest data from banks through AIS and may issue a notice if declared amounts do not match. Declare interest annually as it accrues.

Mistake 3: Claiming Both Section 80TTA and Section 80TTB

You can claim only one — either 80TTA or 80TTB — in a given year. They are mutually exclusive. Senior citizens (60+) should always choose 80TTB since it covers all deposit interest and has a much higher limit of ₹50,000 versus ₹10,000.

Mistake 4: Claiming 80TTA or 80TTB Under the New Tax Regime

Neither Section 80TTA nor Section 80TTB is available under the new tax regime. These deductions can only be claimed if you actively opt for the old tax regime when filing your ITR. Use the old vs new tax regime calculator to determine which regime benefits you more before making the switch.

Mistake 5: Applying 80TTA to FD Interest

Section 80TTA covers only savings bank account interest — not fixed deposit interest, recurring deposit interest, or any time deposit. Applying it to FD interest is incorrect and can result in an underreported tax liability.

Mistake 6: Ignoring Interest from Multiple Banks

TDS thresholds under Section 194A apply per bank, per year. Even if each bank stays below the threshold individually, you must add interest income from all banks in your ITR. The Income Tax Department's AIS now aggregates all bank-reported interest income, making under-reporting easy to detect.

Special Tax Relief for Senior Citizens on Interest Income

The Income Tax Act provides meaningful relief specifically for senior citizens on interest income tax, acknowledging that FD interest is often the primary income source post-retirement.

1. Higher TDS Threshold Under Section 194A
Senior citizens (60 years and above) benefit from a TDS threshold of ₹1,00,000 per bank per year (FY 2025-26), revised upward from ₹50,000 in Budget 2025. This means less TDS friction for those whose FD interest stays within this limit per institution.

2. Section 80TTB Deduction of ₹50,000
Under the old tax regime, senior citizens can reduce their taxable interest income by up to ₹50,000 by claiming the Section 80TTB deduction — applicable to savings account interest, FD interest, RD interest, and post office deposit interest all together.

3. Higher Basic Exemption Limit (Old Regime)
Under the old tax regime:
— Senior citizens (60–79 years): ₹3,00,000 basic exemption
— Super senior citizens (80+): ₹5,00,000 basic exemption
This higher exemption, combined with the 80TTB deduction, means many retired individuals pay significantly lower or even zero tax on their interest income.

4. Exemption from Advance Tax (Section 207)
Senior citizens with no business income are fully exempt from advance tax obligations. They can pay their full tax liability when filing the ITR (by July 31) without any Section 234B or 234C interest being charged.

5. Section 194P — No ITR Filing for Eligible Senior Citizens
Senior citizens above 75 years who receive only pension and interest income from a specified bank may be exempt from filing an ITR entirely. The bank computes and deducts the applicable tax, removing the return-filing burden. This is confirmed by the Income Tax Department of India under Section 194P, introduced in Finance Act 2021.

For a complete picture of how old regime deductions impact your overall tax, use the old vs new tax regime calculator.

Why Interest Income Tax Matters More Than Most People Realise

Interest income tax is one of the most under-reported categories in Indian income tax returns. The Income Tax Department now receives interest income data directly from banks through the Annual Information Statement (AIS) — which is pre-populated in your ITR. A mismatch between what banks report and what you declare can trigger a notice under Section 143(1)(a) for under-reporting.

Penalties under Section 271(1)(c) for concealment of income range from 100% to 300% of the tax evaded — a severe consequence for what many people treat as an oversight rather than a deliberate act.

The safest approach is to report all interest income accurately, claim eligible deductions under 80TTA or 80TTB under the old regime, and verify your TDS credits in Form 26AS before filing. The interest income tax calculator above gives you a clear picture of your liability before you file.

Calculate Your Interest Income Tax Now

Stop estimating and start knowing. The interest income tax calculator above gives you accurate, source-wise tax results for FY 2025-26 in seconds — no setup, no signup, and no manual calculations required.

Enter your interest income details, select your age group and tax regime, and instantly see your taxable income, eligible deductions, TDS adjustment, and final tax liability.

For a complete view of your tax picture alongside salary income tax, dividend income tax, rent income tax, or capital gains tax — explore the full suite of Indian tax calculators on Toolisky.

Content Information

Content reviewed for tax accuracy — April 2025
Reference: Income Tax Department, Government of India — incometax.gov.in | Ministry of Finance, Government of India — finmin.nic.in

Frequently Asked Questions

Is FD interest income taxable in India for FY 2025-26?

Yes. Fixed deposit interest income is fully taxable in India under both the old and new tax regimes for FY 2025-26. It is classified under 'Income from Other Sources' and taxed at your applicable slab rate. There is no basic exemption on FD interest — TDS under Section 194A is deducted by the bank if interest crosses ₹50,000 per year (₹1,00,000 for senior citizens), but the interest remains taxable regardless of whether TDS was deducted.

What is the TDS rate on bank FD interest under Section 194A for FY 2025-26?

The TDS rate on FD interest under Section 194A is 10% for taxpayers with a valid PAN registered with the bank. If PAN is not provided, the rate is 20%. No surcharge or cess is added to the TDS rate. TDS is deducted only when total interest from a bank exceeds ₹50,000 per year for general taxpayers or ₹1,00,000 per year for senior citizens (revised in Budget 2025).

What is Section 80TTA and how does it reduce interest income tax?

Section 80TTA provides a deduction of up to ₹10,000 per year on savings bank account interest for individuals and HUFs below 60 years of age under the old tax regime. It does not cover FD interest or RD interest. If your savings account interest is ₹8,000, the full amount is exempt. If it is ₹15,000, only ₹10,000 is exempt and ₹5,000 is taxable. This deduction is not available under the new tax regime.

What is Section 80TTB and who can claim it?

Section 80TTB is available exclusively to resident senior citizens aged 60 years and above. It allows a deduction of up to ₹50,000 per year on interest income from savings accounts, fixed deposits, recurring deposits, and post office deposits — all combined. This deduction is available only under the old tax regime and cannot be claimed along with Section 80TTA.

Is savings account interest taxable in India?

Yes, savings bank interest income is taxable under 'Income from Other Sources.' However, under the old tax regime, individuals below 60 can claim Section 80TTA to exempt up to ₹10,000 of savings interest per year. Senior citizens can claim Section 80TTB for up to ₹50,000 across all deposit interest. Note that savings account interest is not subject to TDS — banks do not deduct tax at source on savings interest under Section 194A.

What interest income is completely tax-free in India?

The following interest income is fully exempt from income tax in India: (1) PPF interest under Section 10(11), (2) Sukanya Samriddhi Yojana interest under the scheme rules, (3) interest on government-notified tax-free bonds under Section 10(15)(iv)(h), and (4) interest on NRE accounts under Section 10(4) for qualifying non-residents. Even exempt interest income must be declared in Schedule EI of your ITR, as required by the Income Tax Department.

How does the interest income tax calculator work?

The interest income tax calculator on this page takes your interest income from each source (FD, savings account, RD, bonds), your age group, and your chosen tax regime. It applies the correct TDS threshold under Section 194A, the applicable deduction (80TTA or 80TTB) if you are under the old regime, and calculates final tax at the applicable slab rate for FY 2025-26 — including 4% health and education cess.

Do I need to pay advance tax on FD interest income?

Yes, if your total tax liability after TDS credit exceeds ₹10,000 in FY 2025-26, you must pay advance tax in quarterly instalments by the prescribed due dates. An important exception: senior citizens aged 60 and above with no business income are fully exempt from advance tax under Section 207 and can pay the entire tax when filing their ITR without any interest penalty under Section 234B or 234C.

What happens if I don't report interest income in my ITR?

The Income Tax Department receives interest income data directly from banks through the Annual Information Statement (AIS), which is now pre-populated in ITRs. If you fail to report interest income, the system flags it as a mismatch under Section 143(1)(a). Penalties for concealment of income under Section 271(1)(c) range from 100% to 300% of the evaded tax. Interest income is increasingly difficult to under-report given real-time data sharing between banks and the tax department.

Which tax regime is better for senior citizens with FD interest income?

For most senior citizens whose primary income is FD interest, the old tax regime is generally more beneficial — primarily because of the Section 80TTB deduction of ₹50,000 and the higher basic exemption limit of ₹3,00,000. However, this depends on the total income amount. Use the old vs new tax regime calculator on Toolisky to compare both regimes with your actual numbers before filing.

Is RD (recurring deposit) interest taxable?

Yes. Recurring deposit interest is fully taxable and is covered under Section 194A for TDS purposes — the same as fixed deposit interest. TDS on RD interest is deducted by banks when cumulative interest from RDs (and FDs) exceeds the Section 194A threshold in a financial year. Senior citizens can reduce taxable RD interest using the Section 80TTB deduction under the old tax regime.

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Last Updated: 1 April 2025

Developed By

Toolisky Team

Specialized in financial tools, calculation precision, and policy compliance.

Expert Reviewed

Content reviewed for income tax accuracy — FY 2025-26

Calculations verified against official guidelines and industry regulations.

Official References

This Interest Income Tax Calculator India — FD, Savings & Bonds FY 2025-26 is built on official guidelines and verifiable sources: