TDS Section 194A
Bank Interest 10% + Form 121

SECTION 194A (interest other than securities): (1) BANK FD/RD interest: 10% TDS. (2) THRESHOLD: ₹50,000 per FY per bank (₹1,00,000 for senior citizens) — raised from ₹40K/₹50K by Budget 2025 w.e.f. 1 April 2025. From 1 April 2026 the same rule sits in section 393(1) of the Income-tax Act, 2025. (3) NO PAN: 20%. (4) POST OFFICE deposits: similar. (5) CORPORATE FD: 10%. (6) NRO interest: 30% (Section 195, not 194A).

EXAMPLE: ₹8L FD at 7% = ₹56K interest. (a) Over ₹50K threshold. (b) TDS 10% × ₹56K = ₹5,600 — on the whole interest, not just the excess. (c) Claim credit in ITR. SAVINGS account interest: NO TDS (but taxable, 80TTA ₹10K deduction).

FORM 121 (tax year 2026-27 se): Income-tax Act, 2025 ke section 393(6) ke under Forms 15G aur 15H ki jagah ab ek hi Form No. 121 hai. (1) Below 60: tax NIL ho AUR interest jaisi covered income basic exemption limit se zyada na ho. (2) SENIORS 60+: sirf final tax NIL hona chahiye. (3) SUBMIT to each bank at FY start. (4) Bank does NOT deduct TDS. CONDITIONS: (a) below 60: covered income ≤ basic exemption limit (₹4L new regime) + tax NIL. (b) senior with NIL tax.

STRATEGIC: low-income individuals + seniors submit Form 121 to avoid TDS lock-up. AVOID false declaration (penalty).

File at each bank separately.

SENIOR CITIZEN INTEREST: (1) TDS THRESHOLD: ₹1,00,000 per bank (vs ₹50K general), since 1 April 2025. (2) 80TTB deduction (old regime only): ₹50K interest deduction (FD + savings + post office). (3) Form 121 (earlier 15H) to avoid TDS if NIL tax. EXAMPLE: senior ₹8L FD at 7.5% = ₹60K interest. (a) Below ₹1L threshold — no TDS. (b) Old regime: 80TTB deduction ₹50K, taxable interest ₹10K. (c) Interest still reported in ITR.

STRATEGIC: seniors benefit from higher threshold + 80TTB + Form 121. SCSS + FD interest optimized.

194A COVERS: (1) Bank FD + RD interest. (2) Corporate FD interest. (3) Post office time deposits. (4) Interest on loans given. NOT 194A: (1) SAVINGS account interest (no TDS, but taxable). (2) NRO/NRE (Section 195 for NRI). (3) Securities interest (194 / 193). (4) Interest below the ₹50K threshold (₹1L senior).

EXEMPT entities: banks paying to other banks, etc. STRATEGIC: FD interest TDS at 10% if over threshold. Reconcile Form 26AS.

Claim credit or refund.

194A STRATEGY: DEPOSITORS: (1) PROVIDE PAN (avoid 20%). (2) Form 121 (earlier 15G/15H) if low/NIL tax — avoid TDS. (3) SENIORS: 80TTB ₹50K (old regime) + Form 121. (4) SPREAD FDs across banks (each ₹50K / ₹1L senior threshold) — but interest still taxable, just defers TDS. (5) CLAIM TDS credit in ITR. (6) REFUND if total tax < TDS. (7) SAVINGS interest: 80TTA ₹10K (non-senior). (8) RECONCILE Form 26AS + AIS. STRATEGIC: TDS is advance tax — reconcile + claim.

Seniors maximize 80TTB + Form 121. Low-income: Form 121 avoids lock-up.

CONSULT CA for large FD portfolios.