Section 194A requires TDS at 10% on interest other than interest on securities — such as bank and company deposits and loans — above the applicable threshold. The thresholds were raised by the Finance Act 2025, with higher limits for senior citizens.
Rate and thresholds
| Payer / payee | Threshold (FY 2026-27) |
|---|---|
| Bank / post office / co-op (general) | Rs.50,000 |
| Bank interest to a senior citizen | Rs.1,00,000 |
| Interest from others (e.g. company deposits, loans) | Rs.5,000 |
The rate is 10% (20% without PAN under 206AA). Thresholds were rationalised by the Finance Act 2025 — Verify the figure for your case.
What 194A covers
194A applies to interest other than interest on securities — fixed-deposit interest, recurring-deposit interest, interest on loans and advances, and interest on company deposits. Interest on securities is covered by Section 193. Interest paid by a firm to its partners and certain specified interest are excluded.
Avoiding deduction: 15G/15H
A payee whose total income is below the taxable limit can file Form 15G (non-senior) or 15H (senior citizen) with the payer for nil deduction under Section 197A. The forms are submitted at the start of the year and are valid for that financial year.
Practical points
- Banks compute the threshold on aggregate interest across branches (CBS).
- TDS is on interest accrued/credited, even if not withdrawn.
- Reconcile 194A TDS with Form 26AS/AIS before filing.
- Without PAN, the bank deducts 20% (Section 206AA).
Key takeaways
- 194A: 10% on interest other than securities, above the threshold.
- Higher thresholds for senior citizens (Finance Act 2025).
- Form 15G/15H gives nil deduction for below-limit payees.
- No PAN means 20% under Section 206AA.