For the financial year 2025-26, a senior citizen can earn up to ₹1 lakh of interest in a financial year from fixed deposits and other time deposits with a bank, co-operative bank or post office without TDS being deducted under Section 194A.
This limit was increased from ₹50,000 to ₹1 lakh with effect from April 1, 2025. The Income Tax Department’s current TDS guidance confirms the ₹1 lakh threshold for senior citizens.
But there is an important distinction:
₹1 lakh is the TDS threshold, not a tax-free limit.
Even if no TDS is deducted, the interest may still be taxable as part of the senior citizen’s total income.
What is the TDS limit on FD interest for senior citizens?
From April 1, 2025, the Section 194A threshold for interest paid by banks, co-operative banks and post offices is:
| Depositor | Annual interest threshold for TDS |
|---|---|
| Senior citizen | ₹1,00,000 |
| Other individuals | ₹50,000 |
The higher ₹1 lakh limit applies when the interest is paid or credited by a banking company, co-operative society carrying on banking business, or post office.
So, if a senior citizen earns ₹90,000 in eligible FD interest from one bank during the financial year, the bank generally does not deduct TDS under Section 194A.
If the interest exceeds ₹1 lakh, TDS can apply.
Is ₹1 lakh interest completely tax-free?
No.
This is where many FD investors get confused.
The ₹1 lakh figure determines whether the bank has to deduct TDS. It does not determine whether the interest is taxable.
For example, suppose a senior citizen earns ₹1.20 lakh in FD interest.
The interest has crossed the ₹1 lakh TDS threshold, so the bank can deduct TDS.
But if the senior citizen earns ₹90,000 in FD interest, no TDS may be deducted. The ₹90,000 can still form part of taxable income depending on the person’s overall income and applicable tax provisions.
TDS and income tax are two different things
- TDS: Tax deducted by the bank before paying or crediting the interest.
- Income tax: The final tax liability calculated on the person’s total taxable income.
Therefore, no TDS does not mean no tax.
How much FD can a senior citizen keep without TDS?
There is no single FD amount that guarantees no TDS because it depends on the interest rate and the total interest earned during the financial year.
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For a simple annual-interest estimate, you can calculate the approximate principal as:
FD amount = ₹1,00,000 ÷ FD interest rate
For example:
| FD interest rate | Approx. deposit producing ₹1 lakh annual interest |
|---|---|
| 6.00% | ₹16.67 lakh |
| 6.50% | ₹15.38 lakh |
| 7.00% | ₹14.29 lakh |
| 7.50% | ₹13.33 lakh |
| 8.00% | ₹12.50 lakh |
These are illustrations, not recommendations. Actual FD interest can differ depending on the bank, tenure, compounding frequency, payout option and when the deposit is made.
Example: FD interest of ₹80,000
Suppose a 65-year-old senior citizen has FDs with a bank and earns ₹80,000 in interest during FY 2025-26.
Since ₹80,000 is below the ₹1 lakh Section 194A threshold:
TDS under Section 194A = ₹0
However, the ₹80,000 interest is still income and must be considered while calculating the person’s overall tax liability.
Example: FD interest of ₹1.20 lakh
Now suppose the senior citizen earns ₹1,20,000 in FD interest from the bank during the financial year.
The interest exceeds the ₹1 lakh threshold.
At the standard TDS rate of 10%, the TDS would be:
₹1,20,000 × 10% = ₹12,000
The important point is that once the threshold is crossed, TDS is not limited to the ₹20,000 excess. The applicable TDS is calculated on the relevant interest amount, subject to the rules. The Income Tax Department’s guidance specifically notes that once the threshold is exceeded, tax is deducted on the entire amount.
Does the ₹1 lakh limit apply to each FD?
Not necessarily.
You should not assume that every individual FD gets its own ₹1 lakh TDS limit.
The threshold is based on the aggregate interest paid or credited by the relevant payer during the financial year. For banks using Core Banking Solutions, the Income Tax Department says the limit is not calculated branch-wise.
For example, if you have three FDs at different branches of the same bank, you should not assume that you get a separate ₹1 lakh threshold at each branch.
The bank generally considers the relevant interest across its banking system.
What if you have FDs in two different banks?
The situation can be different because the threshold is applied with reference to the relevant payer.
For example:
- Bank A FD interest: ₹70,000
- Bank B FD interest: ₹70,000
- Total interest: ₹1,40,000
If both are eligible bank deposits and the interest at each bank remains below the applicable ₹1 lakh threshold, TDS under Section 194A may not be deducted by either bank.
But ₹1.40 lakh is still total interest income and must be considered when determining the senior citizen’s tax liability.
So don’t confuse the TDS threshold with an exemption from income tax.
What about Section 80TTB?
Senior citizens have another tax provision that is relevant to FD interest: Section 80TTB.
For an eligible resident senior citizen, Section 80TTB provides a deduction of up to ₹50,000 on interest from deposits with banks, co-operative banks and post offices. The Income Tax Department confirms that both savings-deposit and fixed-deposit interest can qualify.
This creates an important distinction:
| Provision | Amount | What it does |
|---|---|---|
| Section 194A | ₹1 lakh | TDS threshold for eligible bank/co-op bank/post-office interest for senior citizens |
| Section 80TTB | ₹50,000 | Deduction available to eligible resident senior citizens |
These are not the same limit.
A senior citizen could therefore have ₹80,000 of eligible FD interest, face no TDS because it is below ₹1 lakh, and potentially claim a deduction of up to ₹50,000 under Section 80TTB if the other conditions are satisfied.
What if your total income is below the taxable limit?
If you are a senior citizen whose total income is below the applicable taxable threshold, you may be able to prevent TDS by submitting Form 15H, provided you meet the conditions for using it.
The Income Tax Department’s TDS guidance states that a resident senior citizen can furnish Form 15H to the payer where the conditions for the declaration are satisfied.
This can be useful because TDS and final tax liability are different.
If the bank deducts TDS even though you ultimately have no tax liability, you may have to claim the TDS credit while filing your income-tax return and receive the eligible refund.
Does this rule apply to all fixed deposits?
No.
The ₹1 lakh threshold specifically covers interest under Section 194A paid by the specified payers such as:
- Banks
- Co-operative banks carrying on banking business
- Post offices
For other types of interest payments, different thresholds can apply. From April 1, 2025, the general threshold for other cases is ₹10,000.
Therefore, don’t automatically apply the ₹1 lakh limit to every FD-like investment outside banks, co-operative banks and post offices.
What changed from April 2025?
Before April 1, 2025, the TDS threshold for interest paid by banks, co-operative banks and post offices was ₹50,000 for senior citizens.
From April 1, 2025, it became ₹1,00,000.
The change was introduced through the Finance Act 2025. The Union Budget documentation records the increase from ₹50,000 to ₹1 lakh for senior citizens.
This means articles still quoting ₹50,000 as the current senior-citizen FD TDS limit are outdated for FY 2025-26 onward.
Bottom line
For FY 2025-26, a senior citizen can earn up to ₹1 lakh of interest during the financial year from eligible bank, co-operative bank or post-office deposits without TDS under Section 194A, assuming the relevant conditions are met.
But remember:
- ₹1 lakh is the TDS threshold, not a tax-free limit.
- If interest exceeds ₹1 lakh, TDS can apply to the relevant interest amount.
- The threshold is not simply available separately for every FD or every branch.
- Section 80TTB has a separate ₹50,000 deduction limit for eligible resident senior citizens.
- If your total income is low enough and you meet the conditions, Form 15H may help prevent TDS from being deducted.
The biggest mistake is to treat “no TDS” as “no tax.” They are two different questions.
