Income Tax on Bank Deposits: TDS, Form 15G/15H, and Section 80C

26 Jun 2026 · 2 min read · 1 views

TDS Section 80C Form 15G Capital Gains

Interest earned on most bank deposits is taxable as income under Indian tax law, and banks are required to deduct Tax Deducted at Source (TDS) once interest paid to a depositor crosses a specified annual threshold, unless the depositor is eligible for exemption.

Form 15G / Form 15H. Depositors whose total income is below the taxable threshold can submit Form 15G (individuals below 60) or Form 15H (senior citizens) to the bank declaring that no tax is due, allowing the bank to skip TDS deduction — but the depositor still needs to report the interest income while filing returns if applicable.

Section 80C tax-saving deposits. A five-year tax-saving fixed deposit is one of several instruments eligible for a deduction under Section 80C of the Income Tax Act, subject to the overall Section 80C ceiling that also covers other eligible investments and expenses.

NRE account interest. As covered in the NRI Banking category, interest on NRE accounts is exempt from Indian income tax for the account holder, unlike NRO account interest, which is taxable.

Capital gains on investments held through a bank. Gains from securities or mutual funds transacted through a bank's investment platform are taxed under capital gains rules, with the rate and holding-period treatment depending on the asset type — distinct from the TDS regime applicable to deposit interest.

Frequently Asked Questions

No — TDS is only a deduction at source against your eventual tax liability. You still need to report total interest income in your income tax return and settle any additional tax due, or claim a refund if TDS deducted exceeds your actual liability.

No — Form 15G/15H can only be submitted by depositors whose estimated total income for the year is below the taxable threshold; submitting it when not eligible can attract penal consequences.

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