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 interest paid or credited to a single payee in the FY exceeds the threshold. From FY 2025-26 the threshold is ₹10,000 where the payer is not a bank, co-operative bank or post office; ₹50,000 where it is; and ₹1,00,000 for a senior citizen. Up to FY 2024-25 these were ₹5,000, ₹40,000 and ₹50,000.

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 per payee per FY, from FY 2025-26 (section 58 of the Finance Act 2025, with effect from 1-Apr-2025): ₹10,000 where the payer is not a bank, co-operative bank or post office;
• ₹50,000 for interest from a bank, co-operative bank or post office;
• and ₹1,00,000 where that payee is a senior citizen (60 or above).
• For FY 2024-25 and earlier the limits were ₹5,000, ₹40,000 and ₹50,000 respectively.
• The deduction is made at the earlier of credit to the payee's account or actual payment.
• Interest credited or paid by a firm to its own partner is outside §194A under §194A(3)(iv);
• from FY 2025-26 such interest falls under §194T (10% above ₹20,000 a year per partner).

Reference: §194A, ITA 1961 (thresholds as amended by Finance Act 2025 s.58) — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.5