How much TDS is deducted on Bank, Company and NRO Fixed Deposits? (2024)

TDS stands for Tax deducted at source, is income tax levied on interest earned by Fixed deposits. The rate on which TDS is applied varies, depending upon, whether the Fixed deposit is with a bank, a company or the post office. TDS also depends upon total interest earned on a financial year. For bank Fixed deposits, TDS is triggered when interest earned in a financial year (1 April to 31st March) is higher than 10K and for company fixed deposit or post office deposit, TDS triggered when interest earned on a financial year is more than Rs 5000.

Rate of TDS is 10% on interest income + 3% cess, which means total interest earned on FD is taxed at the rate of 10.3% for both resident fixed deposit with bank and company fixed deposit.

For NRI's if they have any NRO fixed deposit then TDS rate is flat 30.9%. Similarly for residents which have not furnished their PAN card details with banks, TDS is deducted at the rate of 20% on interest earned.


To give you an example, if you have opened a regular FD of 10 lacs @8.5% interest rate per annum, then you will learn around Rs 85000 in first year (assuming interest are compounding yearly), since this is higher than exempted limit of 10K, it will be taxed at rate of either 10% (if PAN card details are submitted with bank) i.e. bank will deduct 8500 and only pay you Rs 76500.

But, If you have not furnished your PAN card detail with the bank then your TDS will be just doubled i.e. taxed @ the rate of 20%. So the bank will deduct 17K as TDS and only pay you remaining 68K.

When will bank deduct TDS on fixed deposit?

TDS is triggered when total interest earned in bank fixed deposit is greater than Rs 10,000 or greater than Rs 5,000 in company fixed deposit (e.g. Shriram transport fixed deposit or Mahindra finance fixed deposit) or Post office fixed deposit scheme.


For NRO fixed deposits, there is no trigger and interest earned is always subject to TDS, unless you have submitted form 15G or 15H to the bank. Remember, the exemption limit of Rs 10,000 per financial year is now applicable to per bank instead of per branch before.

In 2015, budget, TDS rules for bank fixed deposits are made more stringent. Earlier you could have open multiple FDs with different banks and different branches to prevent interest reaching to 10K in the single financial year per branch, hence avoiding TDS.

This is not possible now becausefrom 2015 onward, instead of per branch rule is made for per bank. So, if your bank has core banking solution enabled, interest from all your FDs at the different branch is considered for TDS purpose. Though, don't worry there are still couple of ways to avoid TDS on interest earned on FDs

What is TDS rate for fixed deposits?

It varies. For a bank Fixed deposit, if your interest income is more than 10K and you have submitted your PAN card details then bank will deduct TDS at rate of 10% only on interest income, but if you have not furnished your PAN card detail then bank will deduct TDS at rate of 20%.

The same rate is applicable for company fixed deposits as well. So if you have invested around 10 lakh rupees on Shriram transport FD or Mahindra finance FD which respectively gives interest of 9.5%, your interest income will be charged at rate of 10 and 20% depending upon your PAN detail with depositor. For NRO fixed deposit, there is no exemption and interest income is charged at flat 30.9%.


Here is the nice summary of when TDS will be applicable and at what rate TDS will be deducted.

That's all about how much TDS is deducted on fixed deposit interest. It's very important to pay attention to your TDS deduction otherwise the meagre interest earned by fixed deposit will be lost. If you are an NRI, then always do NRE or FCNR fixed deposit because interest earned on those deposits are not taxable on Indian and they are not subjected to TDS.

OtherNRI Income tax articlesyou may like
3 Income tax benefits of opening NRI accounts in India
13 ways to save income tax in India
10 Income tax deductions and exemptions NRIs should know
How NRIs can file their income tax returns online
Is NRIs overseas income taxable in India
Is it mandatory to file income tax returns for NRIs?
Is it mandatory for NRIs to declare foreign bank accounts on tax returns?
How to determine tax residential status of NRIs?
10 points NRIs should know about Income tax?
Is Aadhaar card Mandatory for filing an Income tax return for NRIs?

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How much TDS is deducted on Bank, Company and NRO Fixed Deposits? (2024)

FAQs

How much TDS is deducted on fixed deposit? ›

What is the TDS rate on FD? TDS (Tax Deducted at Source) on FD is currently deducted at a rate of 10%. If the total interest earned on FDs for a financial year exceeds Rs. 40,000. However, if the investor's PAN is not available, TDS is deducted at the rate of 20%.

What is the TDS for fixed deposit in NRI? ›

Understanding the tax implications of NRI Fixed Deposits in India is crucial for effective financial management. While NRO Accounts are subject to a 30% TDS on interest income, NRE Accounts are tax-free. However, if your NRI status changes, NRE Accounts will be taxed as resident accounts.

What is the limit of TDS for banks? ›

TDS will be deducted at 2% on cash withdrawals of more than ₹ 20 lakh and 5% for withdrawals exceeding ₹ 1 crore if the person withdrawing the cash has not filed ITR for any of the preceding three AYs.

How much is the limit for TDS deduction? ›

The threshold for TDS deduction on payment made to contractor is Rs 30,000 on one transaction and Rs 1,00,000 on aggregate payment during the year.

What is the TDS on fixed deposit in 2024? ›

The TDS on Fixed Deposit is 10% if your interest for the entire financial year exceeds Rs 40,000 for the Assessment Year (AY) 2024-25. If you do not provide your PAN Card to the Bank, the TDS on FD interest will be 20% or the maximum marginal rate according to existing Income Tax rules.

How do I know how much TDS I have deducted? ›

Process to check status of TDS by using the PAN Card
  1. Visit www.tdscpc.gov.in/app/tapn/tdstcscredit.xhtml.
  2. Key-in the verification code.
  3. Click to proceed.
  4. Enter PAN and TAN.
  5. Select the financial year as well as the quarter and the type of return.
  6. Click on ' Go'

Is TDS applicable for NRI account? ›

NRI Incomes Deemed to Accrue or Arise in India
Types of taxable income of Non-ResidentTDS rate under section 195 of the Act (%)
Investment income20
Income by way of LTCG u/s 115 E of the Act10
Income by way of LTCG from unlisted securities u/s 112(1)(c)(iii)10
8 more rows

Can I transfer money from NRO to NRE account? ›

Another question you may have is- can I deposit money in NRE account from India? You cannot transfer money to a NRE account from a savings account in India. However, you can transfer money from NRO to NRE account. You can also transfer money from one NRE account to another.

Which is better, a NRE or a NRO account? ›

While NRE Accounts score higher in terms of ease and tax-exempt status, NRO Accounts can be more convenient if regular operations in India are required along with receipt of credits into the bank account from the income sources within India.

How to calculate TDS? ›

Step 3: Divide your payable income tax by the number of months of employment to calculate the monthly TDS amount. For example, if your estimated total taxable income for the current financial year is ₹10,00,000 and you are employed for 12 months, your monthly TDS amount would be ₹10,00,000 X 30% / 12 = ₹25,000.

How do banks calculate TDS? ›

First, the lender will estimate your annual mortgage payments, property taxes, heating costs and 50% of your condo fees (if applicable). The lender will then add that up and divide it by your gross annual income.

How much TDS can be refunded? ›

Based on one's slab, a taxpayer is required to file Income Tax Returns. For instance, taxpayers who come under the tax bracket of 5% are entitled to claim TDS refund against the additional amount paid as TDS on, say interest on fixed deposits or investments.

What is the TDS for fixed deposit? ›

Interest income from FDs attract a TDS of 10% and a TDS of 20% if PAN details are not provided to the bank.

How to stop TDS deduction from fixed deposit? ›

According to the provisions of the Income Tax Act, to prevent TDS deduction on fixed deposits, individuals with a total income below the taxable limit can submit Form 15G (for those under 60 years) or Form 15H (for senior citizens aged 60 or older) to the bank.

How much interest on FD is tax free? ›

The TDS on FD is levied only if the interest earned exceeds ₹40,000 in a fiscal year. The limit is ₹50,000 for senior citizens. If your interest income falls above the ₹40,000 (₹50,000 for senior citizens) threshold then you need to submit your PAN Card details/.

How do you calculate TDS on amount? ›

Step 3: Divide your payable income tax by the number of months of employment to calculate the monthly TDS amount. For example, if your estimated total taxable income for the current financial year is ₹10,00,000 and you are employed for 12 months, your monthly TDS amount would be ₹10,00,000 X 30% / 12 = ₹25,000.

What is the limit of 15G and 15H exemption? ›

Eligibility for Form 15G/15H

At the age of 50, your total interest income exceeds the maximum tax-exempt income limit of Rs 2.5 lakhs for the age. This criteria alone disqualifies you from using Form 15G. ii. At the age of 62, even though the interest income exceeds Rs 2.5 lakhs you are eligible for using Form 15H.

Is TDS deducted on fixed assets? ›

TDS is applicable not only on your income but also on your investments and any earnings made on your fixed assets. Hence, you must be aware of TDS rates and applicability while planning your investments. Tax is deductible at source, even on big-ticket purchases like buying a new home.

How to calculate TDS interest? ›

The interest on late filing of TDS returns is calculated in a similar way as interest on late TDS payment. The formula used is: Interest = (Tax Deducted/Collected x Interest Rate x No. of Months Delayed in Filing) / 100 .

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