For senior citizens, the TDS threshold on fixed deposit (FD) interest is higher than the threshold applicable to most other depositors.
From 1 April 2025, a resident senior citizen can receive up to ₹1,00,000 of interest in a tax year from a bank, banking co-operative society or eligible post-office deposit before TDS is deducted. If the applicable interest crosses ₹1,00,000, TDS is generally deducted on the entire interest amount, not just the amount above ₹1,00,000.
This threshold is about TDS, not whether the interest is ultimately taxable.
What is the TDS limit on FD interest for senior citizens?
For a resident senior citizen, the TDS threshold on interest from bank fixed deposits is ₹1,00,000 per tax year.
The threshold applies to interest paid or credited by:
- A banking company
- A co-operative society carrying on banking business
- A post office for deposits under notified schemes
The Income-tax Department’s current guidance confirms that the ₹1 lakh limit applies to senior citizens and is calculated separately for each bank.
Example
Suppose a 65-year-old resident senior citizen earns ₹90,000 of FD interest from a bank during the tax year.
Since the interest does not exceed ₹1,00,000, the bank generally does not deduct TDS on that interest.
If the interest is ₹1,10,000, however, the threshold has been crossed. TDS can then apply to the interest amount as prescribed under the law.
This is why saying that “TDS is deducted only on the amount above ₹1 lakh” is incorrect. The statutory provision says tax is deducted when the aggregate amount exceeds the threshold, and the deduction applies to the entire relevant amount.
Is the ₹1 lakh limit applicable to each FD?
Not necessarily.
The threshold is based on the aggregate interest credited or paid by the relevant bank, rather than treating every FD as an independent ₹1 lakh allowance.
For banks and banking co-operative societies that have adopted Core Banking Solutions (CBS), the threshold is not calculated separately for each branch.
For example, if a senior citizen has three FDs in the same bank and the total interest from those deposits is ₹1,20,000 during the tax year, the bank generally considers the aggregate interest rather than giving a separate ₹1 lakh threshold to each FD.
What if the senior citizen has FDs in two different banks?
The ₹1 lakh TDS threshold is calculated for each bank individually.
For example:
| Bank | FD interest during the year | TDS based on threshold |
|---|---|---|
| Bank A | ₹80,000 | No TDS |
| Bank B | ₹95,000 | No TDS |
| Total | ₹1,75,000 | Still no TDS based on either bank individually |
The Income-tax Department specifically states that the ₹1 lakh senior-citizen threshold is to be computed separately for every bank.
However, this does not mean the ₹1.75 lakh of interest is tax-free. TDS and income-tax liability are separate issues.
Does earning less than ₹1 lakh FD interest mean there is no tax?
No.
This is the most important distinction.
The ₹1 lakh figure is a TDS threshold. It does not create a ₹1 lakh exemption from income tax.
A senior citizen may receive FD interest without TDS being deducted and still have to include that interest in their total income while filing their income-tax return.
For resident senior citizens, Section 80TTB provides a deduction of up to ₹50,000 for eligible interest from deposits with banks, post offices and co-operative banks. This deduction is separate from the ₹1 lakh TDS threshold.
Therefore:
₹1 lakh = TDS threshold
₹50,000 = maximum Section 80TTB deduction for eligible deposit interest
These two numbers should not be confused.
What happens if FD interest exceeds ₹1 lakh?
Suppose a senior citizen earns ₹1,25,000 of eligible FD interest from one bank during the tax year.
Because the interest exceeds the ₹1 lakh TDS threshold, the bank is required to deduct TDS as applicable.
The important point is that TDS is not calculated only on the ₹25,000 excess. The law provides for deduction when the aggregate amount exceeds the threshold, and the deduction is made on the applicable interest amount.
The actual TDS rate and the final tax liability are separate questions.
Can a senior citizen avoid TDS if their total tax liability is nil?
Potentially, yes.
A resident senior citizen who meets the conditions for a no-TDS declaration can submit the prescribed declaration to the bank.
There has been a change in the form framework from tax year 2026–27. Under the Income-tax Act, 2025, the corresponding provision allows an eligible resident individual to provide a declaration that the tax on their estimated total income for the tax year will be nil. For tax years beginning on or after 1 April 2026, the prescribed declaration is Form 121.
The declaration should be furnished in time, preferably before the income is credited or paid, if the taxpayer wants the bank to avoid deducting TDS in the first place.
Does TDS mean the senior citizen has to pay tax?
No.
TDS is simply tax collected in advance by the payer.
If a bank deducts TDS from FD interest, the deduction does not automatically mean that the senior citizen’s final tax liability is equal to the TDS deducted.
The taxpayer’s final liability depends on their total taxable income, applicable deductions, exemptions, rebates and tax regime.
If excess TDS has been deducted compared with the final tax liability, the taxpayer can generally claim the resulting refund through the income-tax return.
What changed from the earlier ₹50,000 limit?
The TDS threshold for senior citizens was increased from ₹50,000 to ₹1,00,000 with effect from 1 April 2025 for interest paid by banks, banking co-operative societies and post offices. The Income-tax Department’s current guidance under the Income-tax Act, 2025 also retains the ₹1 lakh threshold.
This is why older articles stating that senior citizens can earn only ₹50,000 of FD interest before TDS may now be misleading.
The ₹50,000 figure remains relevant in another context: the Section 80TTB deduction for eligible deposit interest.
Quick answer
A resident senior citizen can generally earn up to ₹1,00,000 of interest in a tax year from eligible deposits with a bank, banking co-operative society or post office before TDS is deducted, subject to the applicable rules.
Remember these three points:
- ₹1 lakh is the TDS threshold, not a tax exemption.
- The threshold is generally considered based on the aggregate eligible interest with the same bank, rather than separately for every FD.
- Section 80TTB’s ₹50,000 deduction is separate from the ₹1 lakh TDS threshold.
If you are comparing FD options, don’t judge them simply by whether the bank deducts TDS. The more important number is the post-tax return after considering your total income and applicable tax rules.
