1Is FD interest taxable even if I don't withdraw it?
Yes — it's taxed as it accrues each year, at your slab rate. Report it annually rather than only at maturity, and reconcile against your AIS where the bank reports it.
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ArticleFixed deposits feel safe, but their interest is fully taxable at your slab rate — and many people either overpay through TDS or under-report by mistake. Here's how to handle FD and interest income cleanly.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
Fixed-deposit interest is fully taxable — but TDS, the 80TTA/80TTB deductions, spreading deposits and Form 15G/15H all help you keep more of it.
Interest from fixed deposits is added to your income and taxed at your normal slab rate — there's no special lower rate. It's taxable as it accrues each year, not only when the FD matures, so report it annually rather than in one lump at the end.
Interest on a savings account is deductible up to Rs 10,000 under 80TTA. Senior citizens get the far more generous 80TTB — up to Rs 50,000 — which also covers fixed-deposit interest. These are old-regime deductions, and seniors especially should not miss 80TTB.
Banks deduct TDS once your interest with them crosses the prescribed threshold for the year. If your total income is below the taxable limit, you can submit Form 15G (or 15H for senior citizens) so the bank doesn't deduct TDS unnecessarily — but only if you genuinely qualify. Either way, the TDS shows in your 26AS and is adjusted against your final tax.
Because TDS thresholds apply per bank and interest is taxed in the holder's slab, holding deposits in the name of a lower-income family member (where the funds genuinely belong to them) can reduce the household tax — but beware the clubbing rules if you simply gift money to a spouse. Laddering maturities across years also smooths the income.
Banks report your interest to the tax department, so it appears in your AIS whether or not TDS was deducted. Leaving it out is the most common FD-related mistake and an easy trigger for a notice. Declare it, claim 80TTA/80TTB, and reconcile against your AIS.
Yes — it's taxed as it accrues each year, at your slab rate. Report it annually rather than only at maturity, and reconcile against your AIS where the bank reports it.
Through Section 80TTB — up to Rs 50,000. Unlike 80TTA (savings interest only, Rs 10,000), 80TTB covers fixed-deposit interest for senior citizens, in the old regime.
Submit Form 15G, or Form 15H if you're a senior citizen. This tells the bank not to deduct TDS — but only file it if your income is genuinely below the taxable limit.
Lots of interest income across banks? Write to the firm and we'll help you report it right and claim every deduction.