TDS on Interest Income: Income Tax Department Clarifies Scope of Bank Deduction

The Income Tax Department has clarified that deduction of tax at source on interest income by banks is strictly governed by statutory thresholds and definitional scope under the Income-tax framework, with TDS applicable primarily on interest other than savings account interest—such as fixed and recurring deposits—once aggregate interest exceeds prescribed limits (₹50,000 for general taxpayers and ₹1 lakh for senior citizens), while reiterating that savings account interest remains outside the TDS mechanism and must instead be self-reported, and further emphasising that eligible taxpayers may avoid such deduction through statutory declarations where total income falls below taxable thresholds, thereby reinforcing that TDS is a collection mechanism contingent on threshold breach rather than an automatic levy on all interest income.