- Fixed Deposit (FD) interest is taxable as per your income slab, but you can reduce or eliminate tax using Form 15G or Form 15H.
- Form 15G is for individuals below 60 years with total income below the taxable limit; Form 15H is for senior citizens (60+ years).
- You must submit these forms at the start of the financial year to avoid TDS on FD interest.
- Failing to submit these forms may result in 10% TDS on interest exceeding ₹40,000 (₹50,000 for senior citizens) in a year.
- Always verify your eligibility and consult a tax advisor before submitting these forms.
Why Fixed Deposit Interest is Taxable — And How to Reduce It
When you park your money in a Fixed Deposit (FD), the bank pays you interest. This interest is considered income by the Income Tax Department. It gets added to your total income and taxed at your applicable slab rate. For example, if you earn ₹5 lakh in a year and your FD interest is ₹1 lakh, your total income becomes ₹6 lakh. You’ll pay tax on ₹6 lakh, not just ₹5 lakh.
Banks deduct Tax Deducted at Source (TDS) on FD interest if it exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). TDS is currently 10% if you provide your PAN. Without PAN, it jumps to 20%. This deduction happens even if your total income is below the taxable threshold. That’s where Form 15G and Form 15H come in.
Always link your PAN with your FD account. Without PAN, TDS on FD interest is 20%, not 10%. Use your PAN to avoid over-deduction and claim refunds later.
What is TDS on FD Interest?
TDS (Tax Deducted at Source) is a mechanism where the payer (in this case, your bank) deducts tax from your income (FD interest) before paying you. The current TDS rate on FD interest is 10% if your PAN is linked. If not, it’s 20%. This deduction is mandatory once your FD interest crosses ₹40,000 in a year (₹50,000 for senior citizens aged 60+).
For instance, if you earn ₹45,000 in FD interest in FY 2025-26, the bank will deduct ₹4,500 as TDS (10%) and credit the remaining ₹40,500 to your account. You can claim this TDS while filing your income tax return (ITR).
When Does TDS Apply on FD Interest?
TDS on FD interest applies when:
- Your total FD interest from all banks in a financial year exceeds ₹40,000 (₹50,000 for senior citizens).
- You have not submitted Form 15G or Form 15H to your bank.
- Your PAN is not linked to your FD account (TDS rate becomes 20%).
For example, if you have two FDs in different banks and each gives ₹30,000 interest, total interest is ₹60,000. TDS will apply on ₹60,000, not ₹20,000 per bank.
What Are Form 15G and Form 15H? — The Tax-Saving Tools
Form 15G and Form 15H are self-declaration forms that allow you to avoid TDS on FD interest. They are not tax exemption forms. They only prevent the bank from deducting TDS if your total income is below the taxable limit.
Form 15G vs Form 15H — Key Differences
| Feature | Form 15G | Form 15H |
|---|---|---|
| Eligibility | Individuals below 60 years | Senior citizens (60 years or older) |
| Income Threshold | Total income must be below ₹2.5 lakh (FY 2025-26) | Total income must be below ₹3 lakh (FY 2025-26) |
| TDS Limit | Applies when FD interest exceeds ₹40,000 | Applies when FD interest exceeds ₹50,000 |
| Validity | Valid for one financial year; must be resubmitted annually | Valid for one financial year; must be resubmitted annually |
| Form Number | 15G | 15H |
Who Can Submit Form 15G?
You can submit Form 15G if you meet all of the following conditions:
- You are an individual or a Hindu Undivided Family (HUF).
- You are below 60 years of age as of April 1, 2025.
- Your total income for the financial year is below ₹2.5 lakh (basic exemption limit for individuals below 60).
- Your total interest income from all FDs and Recurring Deposits (RD) is less than ₹40,000 in the year.
- You are a resident Indian (non-residents cannot use these forms).
If your total income exceeds ₹2.5 lakh, submitting Form 15G is illegal. You could face penalties under Section 277 of the Income Tax Act for furnishing false information.
Who Can Submit Form 15H?
Form 15H is exclusively for senior citizens. You can submit it if:
- You are 60 years or older as of April 1, 2025.
- Your total income for the financial year is below ₹3 lakh (basic exemption limit for senior citizens).
- Your total interest income from all FDs and RDs is less than ₹50,000 in the year.
- You are a resident Indian.
How to Fill and Submit Form 15G or 15H in 2026
Filling and submitting these forms is straightforward. You can do it online or offline. Here’s a step-by-step guide.
Step 1: Download the Correct Form
Download Form 15G or 15H from the official Income Tax Department website: https://www.incometax.gov.in. You can also get it from your bank’s website or branch.
Step 2: Fill in Personal Details
Enter your name, PAN, address, and contact details accurately. Any mismatch can lead to rejection. For senior citizens, mention your age as 60 or above.
Step 3: Declare Estimated Income
In the form, you must declare your estimated total income for the financial year. This includes salary, business income, rental income, and interest income. Ensure your estimate is accurate. If your actual income exceeds the limit later, you may owe tax.
Step 4: Mention Previous Year’s Income
If you’re submitting the form in April 2025 for FY 2025-26, you may not know your exact income. Estimate based on previous year’s income or current year’s projections. Banks may ask for proof if your income is close to the threshold.
Step 5: List All FD and RD Accounts
You must mention all your FD and RD accounts across all banks. The form has a section for account numbers, bank names, and estimated interest income from each. This helps the bank verify that your total interest is below the threshold.
Step 6: Sign and Submit
Sign the form and submit it to your bank. You can submit it online via net banking or mobile banking, or physically at the branch. Keep a copy for your records.
Submit Form 15G or 15H at the start of the financial year (April) to avoid TDS on the first interest payout. If you submit it mid-year, the bank will deduct TDS on interest earned until the form is processed.
Online Submission Process (Net Banking)
Most banks allow you to submit Form 15G/15H online:
- Log in to your net banking account.
- Go to the ‘Tax’ or ‘Deposits’ section.
- Select ‘Submit Form 15G/15H’.
- Fill in the details and upload a scanned copy of the form.
- Submit and save the acknowledgment.
Offline Submission Process
If you prefer offline submission:
- Download and print the form.
- Fill it in block letters with blue or black ink.
- Attach a copy of your PAN card.
- Submit it at your bank branch.
- Get an acknowledgment receipt.
Common Mistakes to Avoid While Submitting Form 15G/15H
Even a small error can lead to rejection or TDS deduction. Here are the most common mistakes and how to avoid them.
Mismatch in PAN or Name
Ensure your PAN and name match exactly with your bank records. A mismatch can lead to rejection. For example, if your PAN shows “Rahul Kumar” but your bank account says “Rahul K.,” the form may be rejected.
Incorrect Income Estimate
If you underestimate your income and it later exceeds the threshold, you may owe tax plus interest. If you overestimate, you might pay unnecessary TDS. Be realistic. Use your previous year’s ITR or salary slips as a guide.
Not Mentioning All Accounts
You must list all your FD and RD accounts across all banks. If you miss an account, the bank won’t know about that interest, and TDS may still apply. Double-check your account statements.
Submitting After Interest Crosses Threshold
If your FD interest already exceeds ₹40,000 (₹50,000 for seniors) when you submit the form, the bank will deduct TDS on the interest earned until the form is processed. Submit the form at the start of the year to avoid this.
Using the Wrong Form
Don’t use Form 15G for senior citizens or Form 15H for non-seniors. The forms are not interchangeable. Using the wrong form will lead to rejection.
Furnishing false information in Form 15G or 15H can lead to penalties up to ₹10,000 under Section 277 of the Income Tax Act. Always ensure your declarations are accurate.
What Happens If You Don’t Submit Form 15G/15H?
If you don’t submit these forms and your FD interest exceeds ₹40,000 (₹50,000 for seniors), the bank will deduct 10% TDS on the entire interest amount. Here’s what happens next:
TDS is Deducted
The bank deducts 10% TDS on the interest and credits the rest to your account. For example, if your FD interest is ₹50,000, the bank deducts ₹5,000 as TDS and credits ₹45,000 to your account.
You Must File ITR to Claim Refund
TDS is not a final tax. It’s a prepayment. You must file your Income Tax Return (ITR) to declare your total income and claim a refund if your total income is below the taxable limit. The refund process can take 3-6 months.
No Immediate Tax Benefit
Without Form 15G/15H, you lose the benefit of avoiding TDS upfront. You get the tax back later via ITR, but you lose liquidity (the deducted amount is stuck until you file ITR).
Impact on Cash Flow
If you rely on FD interest for monthly expenses, TDS can disrupt your cash flow. For example, if you earn ₹4,000/month in FD interest, TDS of ₹400/month reduces your income by 10%.
Can You Claim TDS Back If You Didn’t Submit Form 15G/15H?
Yes, you can claim the TDS back when you file your ITR. Here’s how:
Step 1: File Your ITR
Include your FD interest in your total income while filing ITR. The TDS deducted will be reflected in your Form 26AS (tax credit statement).
Step 2: Verify TDS in Form 26AS
Log in to the Income Tax e-filing portal and check Form 26AS. It shows all TDS deducted by banks, employers, etc. Ensure the TDS amount matches what was deducted.
Step 3: Claim Refund in ITR
While filing ITR, enter the TDS amount in the relevant section. If your total tax liability is less than the TDS deducted, you’ll get a refund. The refund is credited to your bank account within 3-6 months.
Example Scenario
Suppose you earned ₹60,000 in FD interest in FY 2025-26. The bank deducted ₹6,000 as TDS. Your total income (including salary) is ₹3 lakh, which is below the taxable limit. When you file ITR, you’ll show ₹60,000 as income, but no tax is payable. The ₹6,000 TDS will be refunded to you.
Always file your ITR even if your income is below the taxable limit. This ensures you can claim TDS refunds and avoid notices from the Income Tax Department.
Tax-Saving Alternatives to Fixed Deposits
While FDs are safe, their interest is fully taxable. If you want to reduce your tax burden, consider these alternatives:
Senior Citizen Savings Scheme (SCSS)
SCSS is a government-backed savings scheme for senior citizens. It offers 8.2% interest (as of April 2026) and qualifies for tax benefits under Section 80C up to ₹1.5 lakh. Interest is taxable, but TDS applies only if interest exceeds ₹50,000/year.
Public Provident Fund (PPF)
PPF offers 7.1% interest (as of April 2026) and is tax-free under Section 80C. The maximum investment is ₹1.5 lakh/year. Interest and maturity amount are tax-free. It’s a great long-term tax-saving tool.
Tax-Free Bonds
Tax-free bonds issued by government entities (like NHAI, PFC) offer interest rates around 5-6% (as of April 2026). The interest is tax-free, making them ideal for high-income earners. However, they have lock-in periods and lower liquidity.
Debt Mutual Funds (for Long-Term Holders)
Debt mutual funds invest in bonds and money market instruments. If held for more than 3 years, they qualify for long-term capital gains tax at 20% with indexation. This can be lower than your slab rate. However, they carry market risk.
Monthly Income Plans (MIPs)
MIPs are hybrid mutual funds that invest in debt and equity. They offer regular payouts and tax efficiency. However, returns are not guaranteed like FDs.
Alternative investments like debt funds or MIPs carry market risk. They are not as safe as FDs. Consult a financial advisor before switching from FDs to these options.
Frequently Asked Questions About Form 15G and 15H
Frequently Asked Questions
Can I submit Form 15G/15H for NRE FDs?
No. Form 15G and 15H are only for resident Indians. Non-Resident Indians (NRIs) cannot use these forms. NRE FD interest is tax-free in India, so no TDS applies.
What if my income exceeds the threshold after submitting Form 15G/15H?
If your income later exceeds the threshold (e.g., due to bonus or rental income), you must pay tax on the excess. The bank will not deduct TDS retroactively, but you must declare the income in your ITR.
Can I submit Form 15G/15H for company FDs?
Yes, you can submit Form 15G/15H for company FDs (deposits with NBFCs or corporates). However, the TDS limit is ₹5,000 (not ₹40,000/₹50,000). Submit the form to avoid 10% TDS on interest above ₹5,000.
How often should I submit Form 15G/15H?
You must submit it every financial year. The form is valid only for the year it’s submitted. For FY 2026-27, submit a new form in April 2026.
What happens if I submit Form 15G/15H after TDS is deducted?
If you submit the form after TDS is deducted, the bank will not reverse the TDS. You can claim the refund when filing your ITR. The TDS will be reflected in your Form 26AS.
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