TDS on interest other than securities

Banks, NBFCs, and other payers must deduct TDS at 10% on interest payments (other than interest on securities) when the annual interest paid to a single payee crosses the applicable threshold.

Key points

• The deductors are banks, co-operative banks, post offices, NBFCs, and any other person — other than individuals or HUFs whose previous-year turnover stays below the §44AB tax-audit limits.
• The base rate is 10%, raised to 20% where the deductee has not furnished PAN.
• Thresholds vary by payee and payer: ₹50,000 per FY where the payee is a senior citizen (60 or above);
• ₹40,000 per FY where the payee is any other resident receiving interest from a bank, co-operative bank, or post office;
• and ₹5,000 per FY for non-bank interest payments.
• The deduction is made at the earlier of credit to the payee's account or actual payment.
• Interest paid by a partnership firm to its own partner is no longer covered here — it falls under §194T from FY 2025-26 onwards.

Reference: §194A, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.5