How FD Interest Is Taxed in India
FD interest is taxed at your slab rate under “income from other sources” — accrual vs receipt, new vs old regime, deductions, TDS and reporting in ITR.
Updated 30 September 2026 · 25 banks trackedWhat you need to know
Interest from fixed deposits is fully taxable as “income from other sources” at your income-tax slab rate. For cumulative FDs, interest should be declared every year as it accrues, even though you receive it only at maturity. The new tax regime is the default; the old regime allows deductions such as 80C/Sec 123 (tax-saver FD) and 80TTB (seniors).
New tax regime slabs (FY 2026-27)
| Income slab | Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 – 8 lakh | 5% |
| ₹8 – 12 lakh | 10% |
| ₹12 – 16 lakh | 15% |
| ₹16 – 20 lakh | 20% |
| ₹20 – 24 lakh | 25% |
| Above ₹24 lakh | 30% |
Key points
- A rebate makes total income up to ₹12 lakh tax-free in the new regime (₹12.75 lakh for salaried after the ₹75,000 standard deduction); FD interest counts in this income.
- Health & education cess of 4% applies on tax.
- Senior citizens can claim up to ₹50,000 deduction on deposit interest (80TTB) in the old regime only.
- Tax-saver FD deposits (up to ₹1.5 lakh) are deductible only in the old regime.
- Interest on a minor’s FD is clubbed with the parent’s income (₹1,500 exempt per child).
- NRE and FCNR interest is exempt for non-residents.
Tax on ₹1 lakh interest
| Your marginal slab | Tax incl. 4% cess | Interest you keep |
|---|---|---|
| 0% | ₹0 | ₹1,00,000 |
| 5% | ₹5,200 | ₹94,800 |
| 10% | ₹10,400 | ₹89,600 |
| 15% | ₹15,600 | ₹84,400 |
| 20% | ₹20,800 | ₹79,200 |
| 25% | ₹26,000 | ₹74,000 |
| 30% | ₹31,200 | ₹68,800 |
Frequently asked questions
Should I show FD interest every year even if I get it only at maturity?
Yes — the accrual method is recommended and matches the TDS deducted each year.
Is FD interest taxable if it is below the TDS threshold?
Yes. TDS not being deducted does not make it tax-free.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.