TDS on Interest Other Than Securities in 2026: Bank and Non-Bank Limits, Seniors and Form 121

Interest is where TDS touches the most people. A retired teacher with fixed deposits, a family that lent money to a relative's company, an MSME paying interest on an unsecured loan from a friend and a co-operative society paying its depositors are all inside the same set of rules. This guide is for depositors who want to know why tax was cut from their FD interest and how to stop it when they owe no tax, and for businesses that pay interest and need to know when to deduct. It covers the bank and non-bank thresholds, the higher limit for senior citizens, the interest that is never subject to TDS, Form 121 (which replaced Forms 15G and 15H), and the changes made by the Income-tax Act, 2025 and the Finance Act 2026, with worked examples in rupees.

Quick answer

TDS on interest other than securities is 10%. Banks, co-operative banks and post offices deduct only when a depositor's interest for the tax year exceeds ₹50,000 — ₹1,00,000 for senior citizens. Companies, firms and other specified persons paying interest on loans or deposits deduct once it exceeds ₹10,000. Since 1 April 2026 this is section 393(1) Table Sl. No. 5(ii) and 5(iii) of the Income-tax Act, 2025 (old section 194A).

• Bank, co-operative bank or post office deposit: ₹50,000 limit, ₹1,00,000 at 60+

• Interest paid by companies, firms, LLPs and large proprietors: ₹10,000 limit

• Savings account interest and interest paid to banks or insurers: no TDS

• Nil tax? Give the payer Form 121 (old 15G/15H) at the start of the year

• No PAN: 20%

Which interest is covered

Section 393(1) Table Sl. No. 5 of the Income-tax Act, 2025 has three rows for interest paid to residents. Row 5(i) is interest on securities — debentures, bonds and government securities — which has its own threshold of ₹10,000 and replaced section 193. Rows 5(ii) and 5(iii) cover everything else: "interest other than interest on securities", which is what section 194A used to deal with. This guide is about those two rows.

In practice, interest other than securities includes interest on fixed deposits and recurring deposits with banks, co-operative banks and the post office, interest on deposits with companies and NBFCs, interest on inter-corporate deposits, interest on unsecured loans taken by a business from individuals or other businesses, interest on delayed payments to suppliers when it is charged as interest, and interest on a security deposit where the agreement pays interest on it.

The definition of time deposits in section 402(41) is worth knowing: deposits, including recurring deposits, repayable when a fixed period ends. That is why RD interest is treated the same way as FD interest. Savings and current account balances are not time deposits, and interest on them is exempt from TDS under section 393(4).

Interest TDS at a glance (2026-27)

10%

Rate

rate in force, residents

₹50,000

Bank, co-op bank, post office

per depositor per year

₹1,00,000

Senior citizens (60+)

same payers

₹10,000

All other payers

companies, firms, LLPs

Who has to deduct: banks and everyone else

Row 5(ii) applies when the payer is a banking company, a co-operative society carrying on the business of banking, or a post office paying interest on a deposit under a notified government scheme. These payers deduct 10% only when the interest they pay or credit to a depositor in the tax year exceeds ₹50,000, or ₹1,00,000 where the depositor is a senior citizen. Section 2(100) defines a senior citizen as a resident individual aged 60 or more at any time during the tax year — so someone who turns 60 in February 2027 gets the higher limit for the whole of 2026-27.

Row 5(iii) covers interest paid by any other specified person: every company, partnership firm, LLP, trust, society or other non-individual, plus any individual or HUF whose business turnover exceeded ₹1 crore, or professional receipts ₹50 lakh, in the previous tax year. The threshold is ₹10,000 per payee per year. NBFC and company fixed deposits, interest on loans from friends or family taken by a private limited company, and interest paid by a firm on a lender's deposit all fall here.

That leaves a large group with no duty at all: individuals and HUFs below those turnover lines. A shopkeeper with ₹60 lakh turnover who pays ₹2 lakh of interest on a loan from a cousin does not deduct TDS on it. A salaried person paying interest on a personal loan from a friend does not either. The lender still has to declare the interest and pay tax on it.

Two practical notes in the law help banks. Under Note 1, where a bank, co-operative bank or housing finance company has not adopted core banking, the threshold for time deposits is tested branch by branch; almost every bank now runs core banking, so in practice the limit applies across all your deposits with that bank. Under Note 2, the payer may increase or reduce later deductions in the same tax year to correct an earlier excess or shortfall — which is how a bank fixes a deduction it got wrong in an earlier quarter.

Rates and thresholds

The rate in row 5 is "rates in force", fixed each year by Part II of the First Schedule to the Finance Act. For 2026-27 the Finance Bill 2026 set 10% on interest other than interest on securities for resident non-companies and domestic companies alike, and said the rates remain the same as in 2025-26. The thresholds were raised by the Finance Act 2025 from 1 April 2025 and carried into the new Act unchanged.

Payment codes are from a practitioner rate chart (TDSMAN); check them against the challan drop-down when paying.

Like other TDS limits, these are annual aggregates per payee. Once the interest paid or credited to a person in the tax year crosses the limit, tax is deducted on the whole amount, not only on the excess. Tax is deducted when the interest is credited — including a credit to an "interest payable" or provisions account — or when it is paid, whichever is earlier. Banks therefore usually deduct as interest accrues on a deposit, not only when the FD matures, which is why a cumulative FD can show TDS every year even though nothing has been paid out.

Interest that is never subject to TDS

Section 393(4) Table Sl. No. 7 lists interest on which rows 5(ii) and 5(iii) never apply. The most useful items for businesses and households are these.

Interest paid to a banking company, a financial corporation set up under a Central or State Act, LIC, the Unit Trust of India, a company or co-operative carrying on insurance business, or another notified institution. So an MSME paying interest on its term loan, overdraft or cash credit does not deduct TDS on it. The Finance Act 2026 also added interest paid to co-operative societies carrying on the business of banking, including co-operative land mortgage banks, from 1 April 2026.

Interest paid by a co-operative society to its members, by one co-operative to another, and on deposits with primary agricultural credit societies, primary credit societies and co-operative land development banks — unless the paying co-operative's turnover exceeded ₹50 crore in the previous year and the interest crosses the threshold. Large co-operative credit societies therefore do deduct; small ones generally do not.

Interest with no TDS (s.393(4) Table Sl. 7)

0/6

• Interest paid to banks, co-operative banks, LIC, insurers and public financial corporations
• Co-operative society interest to members (unless turnover above ₹50 crore)
• Savings and current account interest
• Interest on income-tax refunds paid by the Central Government
• Motor-accident tribunal interest paid to an individual (from 1 April 2026)
• Interest paid by a firm to its partner (taxed under s.393(3) Sl. 7 instead)

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Interest on non-time deposits with a bank, such as savings accounts. Interest paid by the Central Government under the tax laws — including interest on an income-tax refund. Interest on deposits under notified government schemes. Interest on zero-coupon bonds of certain infrastructure funds, public sector companies and scheduled banks. And interest paid by a firm to its partner, which is excluded here because partner payments have their own row in section 393(3).

Motor accident compensation changed in 2026. Until 31 March 2026, interest on compensation awarded by a Motor Accidents Claims Tribunal was free of TDS only up to ₹50,000 a year. The Finance Act 2026 removed TDS entirely on such interest paid to an individual from 1 April 2026, and made the interest exempt income for the victim or legal heir.

Separately, section 393(5) says no TDS is ever deducted on amounts payable to the Government, the Reserve Bank, tax-exempt statutory corporations or mutual funds.

Senior citizens and specified senior citizens

Senior citizens get the higher ₹1,00,000 bank threshold, and they can file a Form 121 declaration even if their interest is above the basic exemption limit, as long as the tax on their total income for the year works out to nil. That second point matters under the new tax regime: with the nil-rate slab of ₹4 lakh, the standard deduction and the rebate up to ₹12 lakh of income, many retired depositors with a pension and several lakh of FD interest owe no tax at all.

There is a further category for the very old. A specified senior citizen — a resident aged 75 or more, whose only income is pension and interest from the same bank that pays the pension, and who has given that bank a declaration — falls under section 393(1) Table Sl. No. 8(iii). In that case the bank computes the person's total income after deductions and rebate and deducts the tax on it at the rates in force, so the bank's deduction covers the whole tax liability.

Depositor under 60 vs senior citizen

Point	Under 60	Senior citizen (60+)
Bank/post office threshold	₹50,000	₹1,00,000
Other payers' threshold	₹10,000	₹10,000
Form 121 allowed if tax is nil	Only if interest and similar income is within the basic exemption limit	Yes, whatever the income, if tax is nil
Bank computes full tax	No	Only if 75+ with pension and interest in the same bank
Old form	15G	15H

Bank/post office threshold

Under 60

₹50,000

Senior citizen (60+)

₹1,00,000

Other payers' threshold

Under 60

₹10,000

Senior citizen (60+)

₹10,000

Form 121 allowed if tax is nil

Under 60

Only if interest and similar income is within the basic exemption limit

Senior citizen (60+)

Yes, whatever the income, if tax is nil

Bank computes full tax

Under 60

No

Senior citizen (60+)

Only if 75+ with pension and interest in the same bank

Old form

Under 60

15G

Senior citizen (60+)

15H

Form 121: stopping TDS when your tax is nil

Section 393(6) lets a resident individual — and other non-company, non-firm persons such as HUFs — give the payer a written declaration that the tax on their estimated total income for the year will be nil. Interest on securities and interest other than securities are both on the list. From 1 April 2026 the declaration is Form 121 under rule 211 of the Income-tax Rules, 2026, a single form that replaced Form 15G (for people under 60) and Form 15H (for seniors).

The key restriction is in the Note to section 393(6). A person under 60 cannot use the declaration if the total of the income it covers — interest, dividends and the other listed items — is likely to exceed the maximum amount not chargeable to tax, which is ₹4 lakh under the new regime. Seniors have no such ceiling; they only need a nil estimated tax. In every case the declaration needs a valid PAN, or it is invalid and the payer must deduct at 20%.

Give a separate Form 121 to each bank or payer, at the start of the tax year and before the first interest credit. Most banks accept it through net banking. A declaration does not undo TDS already deducted — that money comes back only as a refund when you file your return. The payer gives each declaration a unique number, quotes it in its quarterly statement and must send a copy to the Department by the 7th of the following month. From 1 April 2027 the Finance Act 2026 will let investors in listed securities file one declaration with their depository instead of many, and payers will forward declarations quarterly.

Do not file Form 121 if your tax is not nil. A false declaration is an offence, and the income will appear in your Annual Information Statement anyway because the payer reports it. If your tax is low but not nil, the right route is a lower deduction certificate in Form 128 — see our lower TDS certificate guide.

Submitting Form 121 to your bank

1. 1

   Estimate your tax for the year

   Add pension or salary, all interest, rent and other income. Work out tax under the regime you will use. Only continue if the tax is nil.

2. 2

   Check the income ceiling if you are under 60

   The interest and other income covered by the declaration must not exceed ₹4 lakh under the new regime.

3. 3

   Confirm your PAN is valid and linked

   A declaration without a valid, operative PAN is invalid and leads to 20% TDS.

4. 4

   File with each payer in April

   Use the bank's net-banking option or the branch. One form per bank or company; a fresh form each tax year.

5. 5

   Check your AIS later

   The interest still appears in your Annual Information Statement. Report it in your return.

   e-Filing portal

Worked examples in ₹

1. Fixed deposit, under 60. Ravi, 45, earns ₹62,000 of FD interest from one bank in 2026-27. That is above ₹50,000, so the bank deducts 10% on the whole ₹62,000: ₹6,200. If his interest were ₹48,000, nothing would be deducted — but the ₹48,000 is still taxable in his return.

2. Senior citizen with two banks. Meena, 67, earns ₹90,000 of interest from Bank A and ₹70,000 from Bank B. Each bank tests its own interest against ₹1,00,000, so neither deducts. Her total pension and interest decide whether she owes tax; if she does, she pays it through advance tax or self-assessment.

3. Company borrowing from a director's relative. A private limited company pays 12% interest on a ₹10 lakh unsecured loan from a director's brother: ₹1,20,000 a year, credited monthly at ₹10,000. In the second month the year's total reaches ₹20,000, above ₹10,000, so the company deducts 10% on ₹20,000 (₹2,000) and then ₹1,000 every month after. Total TDS for the year: ₹12,000.

4. NBFC deposit. An investor earns ₹15,000 interest on a company fixed deposit. The company is a specified person under row 5(iii) with a ₹10,000 limit, so it deducts ₹1,500.

5. Small proprietor. A trader whose turnover last year was ₹75 lakh pays ₹1,80,000 interest on a loan from a friend. The trader is not a specified person, so no TDS applies. If last year's turnover had been ₹1.2 crore, the trader would deduct ₹18,000.

6. No PAN. If the investor in example 4 has not given a PAN, the company deducts 20% — ₹3,000 instead of ₹1,500.

7. Student with nil tax. Ananya, 22, has no other income and earns ₹70,000 of FD interest from a deposit left by her grandparents. Her interest is below the ₹4 lakh ceiling and her tax is nil, so she can give the bank Form 121 in April and no TDS is deducted.

Try it — TDS on interest

Payment AmountNature of Payment (Section)

194C — Contractor (Individual/HUF) · 1%194C — Contractor (Others) · 2%194J — Professional fees · 10%194J — Technical services · 2%194H — Commission / brokerage · 2%194I — Rent (Land & building) · 10%194I — Rent (Plant & machinery) · 2%194Q — Purchase of goods · 0.1%194A — Interest (other than securities) · 10%

Payee PAN

PAN availableNo PAN (20%)

Payment Amount₹62,000.00

Section194A

TDS Rate10%

TDS to Deduct₹6,200.00

Net Payable to Payee₹55,800.00

Open the full TDS Calculator (PDF, save, compare)

Deposit, reporting and getting the credit

Businesses that deduct interest TDS deposit it by the 7th of the next month under their TAN, report it in the quarterly statement Form 140 (formerly Form 26Q) — due 31 July, 31 October, 31 January and 31 May for tax year 2026-27 — and issue the lender a Form 131 certificate (formerly Form 16A) from TRACES. Missing the deduction costs interest at 1% a month or part of a month a month, late deposit 1.5% a month or part of a month a month, and 30% of the interest expense can be disallowed in the payer's own tax computation. Our TDS return filing guide covers the statement and corrections.

Banks also have a reporting duty below the threshold. Under section 397(3)(g), banks, co-operative banks and housing finance companies must file statements of interest they pay even when it does not exceed the limit and no tax is deducted. That is why interest you earned without any TDS still shows up in your Annual Information Statement — and why leaving it out of your return is likely to lead to a notice.

Depositors claim the TDS as a credit in their own return. The bank or company's deduction appears against your PAN once the quarterly statement is processed. If the credit is missing or under the wrong PAN, ask the payer to file a correction on TRACES rather than paying the tax again yourself.

Common mistakes and how to fix them

Still applying ₹40,000 or ₹5,000. Those limits ended on 31 March 2025. Update loan and deposit software to ₹50,000, ₹1,00,000 and ₹10,000.

Deducting on interest paid to your bank. Interest on business loans from banks and insurers is exempt from TDS. Some accounting setups apply TDS to every "interest" ledger; exclude bank lenders.

Forgetting Form 121 until after the first credit. A declaration works only from the date it is given. File it in April; for TDS already deducted, claim a refund in your return.

Under-60s using Form 121 with high interest. If your covered income is above ₹4 lakh, the declaration is not allowed even if deductions bring your tax to nil. Use a lower deduction certificate instead.

Ignoring cumulative FDs. Banks deduct as interest accrues each year. Declare accrued interest each year in your return to match the TDS credit, rather than all at maturity.

Old forms for new periods. For interest credited or paid on or after 1 April 2026, use Form 140, Form 131 and Form 121. Forms 26Q, 16A, 15G and 15H apply only where the earlier of credit or payment was on or before 31 March 2026.

What changed in 2025 and 2026

Section 194A of the 1961 Act became rows 5(ii) and 5(iii) of the table in section 393(1) of the Income-tax Act, 2025, which came into force on 1 April 2026; the exemptions moved to section 393(4) and the declarations to section 393(6). The transition rule is that the earlier of credit or payment decides which Act applies. The rate stayed at 10%.

The figures changed a year earlier. From 1 April 2025 the Finance Act 2025 raised the bank threshold from ₹40,000 to ₹50,000, the senior-citizen threshold from ₹50,000 to ₹1 lakh and the other-payer threshold from ₹5,000 to ₹10,000. From 1 April 2026 the Finance Act 2026 removed TDS on motor-accident interest paid to individuals and on interest paid to co-operative banks. From 1 April 2027 depository filing of declarations is due to start.

Official links

• Income-tax Act, 2025 — Gazette textSection 393(1) Table Sl. 5; s.393(4) Sl. 7; s.393(6)
• Finance Bill, 2026 and memorandumMACT interest, co-operative banks, depository declarations
• TDS compliance helpTransition rule, interest
• e-Filing portalAIS, returns, refunds
• TRACESForm 131 certificates, corrections, Form 128 applications

What to do next

If you are a depositor, add up the interest you expect from each bank this year, check it against the limits and decide in April whether Form 121 is right for you. If you run a business that pays interest on loans or deposits, list every lender by PAN, separate out banks and insurers, and set your system to test the year's total against ₹10,000. Then check individual figures with our free TDS calculator, and read what TDS is for deposit dates and forms across all payment types.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the TDS limit on FD interest in 2026?

Banks, co-operative banks and post offices deduct TDS only when the interest they pay you in the tax year exceeds ₹50,000, or ₹1,00,000 if you are 60 or older. Above the limit, tax is deducted at 10% on the whole year's interest. Both limits were raised from 1 April 2025 and carried into section 393 of the Income-tax Act, 2025.

What is section 194A in TDS?

Section 194A of the 1961 Act required TDS on interest other than interest on securities — FD and RD interest, interest on loans and deposits, and similar payments. From 1 April 2026 it is section 393(1) Table Sl. No. 5(ii) and 5(iii) of the Income-tax Act, 2025. The rate is 10%, and the threshold is ₹50,000 for banks (₹1,00,000 for seniors) and ₹10,000 for other payers.

What replaced Form 15G and Form 15H?

From 1 April 2026 both are replaced by a single declaration, Form 121, under section 393(6) of the Income-tax Act, 2025. You give it to each bank or payer to ask that no tax be deducted because your estimated tax for the year is nil. People under 60 cannot use it if their interest and similar income exceeds the basic exemption limit; seniors can, provided their tax is nil.

Does a company have to deduct TDS on interest paid on a loan from an individual?

Yes. Companies, firms, LLPs and individuals or HUFs above the ₹1 crore business or ₹50 lakh professional turnover mark must deduct 10% when interest paid to one resident lender exceeds ₹10,000 in the year. Interest paid to a bank, insurance company or public financial institution is exempt from TDS.

Is TDS deducted on savings account interest?

No. Interest on deposits with a bank other than time deposits — which in practice means savings and current account interest — is outside TDS under section 393(4) Table Sl. No. 7. It is still taxable income and must be reported in your return. Fixed and recurring deposits are time deposits, so TDS applies to them once the threshold is crossed.

What if I have not given my PAN to the bank?

The bank must then deduct at 20% instead of 10%, under section 397(2) of the Income-tax Act, 2025. A Form 121 declaration without a valid PAN is invalid, so it will not stop the deduction either. Update your PAN, and make sure it is linked with Aadhaar, before the next interest credit.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.The Income-tax Act, 2025 (Act No. 30 of 2025), Gazette of India Extraordinary, 21 August 2025 — Ministry of Law and Justice (Legislative Department) · accessed 12 October 2026
2. 2.Finance Bill, 2026 — First Schedule, Part II (rates for deduction of tax at source) — Ministry of Finance (Union Budget 2026-27) · accessed 12 October 2026
3. 3.Memorandum explaining the provisions in the Finance Bill, 2026 — Ministry of Finance (Union Budget 2026-27) · accessed 12 October 2026
4. 4.Memorandum explaining the provisions in the Finance Bill, 2025 — Ministry of Finance (Union Budget 2025-26) · accessed 12 October 2026
5. 5.TDS Compliance — e-Filing help — Income Tax Department (e-Filing portal) · accessed 12 October 2026
6. 6.TDS / TCS Rate Chart Tax Year (FY 2026-27) — TDSMAN · accessed 12 October 2026
7. 7.Form 121 Income Tax: How to Fill, PDF Download & Eligibility — ClearTax · accessed 12 October 2026