ITR filing 2026: FD interest is taxable — here's how to report it correctly

If you have earned interest from fixed deposits (FDs) during the financial year 2025-26, you are required to report it while filing your income tax return (ITR) which is due on July 31, 2026.

Since interest arising from fixed deposits is fully taxable and is reported to the income tax department by banks, failing to disclose it correctly can lead to tax notices or a mismatch in your ITR, causing a hassle.

How to check FD interest income?

Taxpayers can easily check the amount of FD interest earned during the financial year through their bank statements, Form 26AS, the Annual Information Statement (AIS) or the Taxpayer Information Statement (TIS).

Some of the documents mentioned above can easily be accessed via the income tax department's e-filing portal.

How is FD interest income taxed and reported in ITR?

Interest earned from fixed deposits is taxable under the head ‘Income from other sources’ in the relevant ITR form. The income is added to the taxpayer's total income and taxed at the applicable income tax slab rate.

Under the old tax regime, the principal amount deposited in a fixed deposit for a period of five years also qualifies for a deduction under Section 80C of the Income-tax Act, 1961, subject to an overall limit of ₹1.5 lakh.

Additional relief for senior citizens

Resident senior citizens opting for the old tax regime can claim a deduction of up to ₹50,000 on interest earned from savings accounts, fixed deposits or recurring deposits, as per the provision under Section 80TTB of the Income-tax Act, 1961. However, the deduction claimed cannot exceed the actual interest earned.

Hence, tax implications on FD interest income differ based on the what tax regime was chosen, the age of the taxpayer and their residential status.

TDS on FD interest

According to Section 194A of the Income-tax Act, TDS (tax deducted at source) is applicable to interest earned on fixed deposits.

Banks or lenders deduct TDS at 10% if the interest earned during the financial year exceeds ₹50,000 for resident general citizens and ₹1 lakh for resident senior citizens. If PAN details are not provided, then TDS applies at a flat rate of 20% from the interest income.

Any tax deducted at source from the FD interest income can be adjusted against the taxpayer's total tax liability while filing the tax return. Depending on the taxpayer's final tax liability for the relevant financial year, this adjustment may help in reducing the tax payable or result in a refund.

Who can claim relief from TDS?

Depositors who do not have taxable income can furnish a declaration in Form 15G (for below 60 years and HUFs ) and Form 15H (for senior citizens of age 60 and above). This benefit is only available to Indian residents.

Doing so would allow banks to avoid deducting TDS on the FD interest, helping depositors manage their cash flow more effectively.

The basic exemption limit under the old tax regime is ₹2,50,000 for individuals below 60 years, and ₹3,00,000 for senior citizens. Under the new tax regime, the limit is ₹4,00,000 for all individuals.

However, after the introduction of the Income-tax Act, 2025, both Form 15G and Form 15H have now been replaced by a single and unified Form 121, though it still serves the same purpose.

Now that the old forms have been scrapped, this age-based distinction is no longer applicable. The government has introduced a single, age-neutral format that captures the required information. Some banks may still show Form 15G and 15H on their online portals, but they are still applicable.