Section 194A · TDS on interest other than interest on securities
Why your bank cuts TDS on fixed deposit interest.
- Rate
- 10% (20% if no PAN)
- Bank/PO threshold
- ₹40,000 (₹50,000 senior)
- Other payers
- ₹10,000 (₹50,000 senior)
- Form 15G/15H
- No TDS if income below limit
In plain English
When a bank, post office or company pays you interest on a deposit, loan or bond (other than on securities), it has to deduct TDS at 10% once the interest crosses a small threshold. Senior citizens get a higher threshold, and Form 15G/15H stops the deduction if your income is below taxable limits.
| Meaning | Number |
|---|---|
| Rate | 10% (20% if no PAN) |
| Bank/PO threshold | ₹40,000 (₹50,000 senior) |
| Other payers | ₹10,000 (₹50,000 senior) |
Common payments covered by 194A
- Bank fixed-deposit interest — Threshold ₹40,000 (₹50,000 senior)
- Post Office / co-op bank interest — Same thresholds
- Interest on recurring deposit — Covered after Finance Act, 2015
- Interest on loans, debentures (non-listed) — Threshold ₹5,000 / ₹10,000
- NOT covered — Interest on savings account — that goes to 80TTA/TTB
What this section covers
Section 194A requires every person (other than an individual or HUF not liable to audit) paying interest other than interest on securities to a resident to deduct TDS at 10%. The threshold above which TDS applies is ₹40,000 for interest from banks, co-operative banks and post-office deposits (₹50,000 for senior citizens), and ₹10,000 for interest paid by others (including companies, partnerships and other deposits). Where the recipient does not furnish PAN, TDS goes up to 20% u/s 206AA. Form 15G (non-seniors) or 15H (senior citizens) can be furnished to stop deduction where total income will be below the basic exemption. Interest on savings bank account is NOT covered by 194A — it is governed by 80TTA/80TTB.
The legal text
“Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof… deduct income-tax thereon at the rates in force.”
Old Act vs New Act
| Aspect | Act, 1961 | Act, 2025 |
|---|---|---|
| Section | 194A | 393 |
| Topic | TDS on interest other than interest on securities | |
| Verdict | Consolidated under unified TDS section | |
| Notes | Under the Income-tax Act, 2025 the bulk of the TDS provisions including 194A are consolidated under Section 393. The 10% rate and the bank/non-bank thresholds, including senior-citizen enhancement, are retained. | |
Common confusion
The ₹40,000 threshold is per bank (PAN-wise across branches), not per FD. Also, interest on a savings bank account is OUTSIDE 194A and is deduction-eligible u/s 80TTA / 80TTB instead.
Who should know this
Related sections
Based on the official Income-tax Act, 1961 and the published Income-tax Act, 2025 as available on the Income Tax Department website. Always verify against the published Act and consult a qualified professional.