FD Rules in India 2026: Interest, TDS, and Withdrawal Rules
Fixed deposits are commonly used to earn interest on savings for a chosen period. However, the amount you earn and your ability to access the money before maturity depend on several banking and tax rules.
The FD rules in India cover interest rates, TDS, premature withdrawal, non-callable deposits, maturity and other deposit conditions. In 2026, depositors should also understand the applicable RBI framework and the transition to the Income Tax Act, 2025.
Latest FD Rules in India 2026
| Rule | What It Means |
| Uniform interest rates | Similar deposits booked on the same date should receive the same applicable rate across branches. |
| No negotiated retail rates | Banks must follow their disclosed FD rate structure instead of offering individually negotiated rates to retail depositors. |
| Advance rate disclosure | Banks must clearly publish or display applicable FD interest rates before accepting deposits. |
| Bulk deposit threshold | For scheduled commercial banks, excluding RRBs, a single term deposit of ₹3 crore or more is treated as a bulk deposit. Different thresholds apply to some other bank categories. |
| Bulk deposit pricing | Banks may offer different rates on bulk deposits as permitted under RBI rules and their deposit policies. |
| TDS threshold | TDS may apply when eligible annual interest crosses ₹50,000 for other resident depositors and ₹1,00,000 for resident senior citizens. |
| TDS law from April 2026 | Relevant TDS provisions move under Section 393 of the Income Tax Act, 2025 from April 1, 2026. |
| FD interest taxation | FD interest is generally taxable according to the depositor’s applicable income-tax provisions. TDS and final tax liability are separate. |
| Premature withdrawal | Callable FDs may be closed before maturity, subject to the bank’s terms. |
| Interest on early withdrawal | Interest is generally recalculated based on the rate applicable to the actual period for which the deposit remained with the bank. |
| Premature withdrawal penalty | Banks may levy a penalty as per their approved policy, and the applicable terms should be disclosed to depositors. |
| Callable FD rule | Individual term deposits of ₹1 crore or below must generally provide a premature-withdrawal facility. |
| Non-callable FDs | Where permitted, these restrict premature withdrawal and may carry different interest rates. |
| Holiday maturity | If an FD matures on a non-business day, interest is payable for the intervening period as prescribed under RBI rules. |
| Existing FDs | Fixed-rate deposits already booked generally continue according to their contracted terms, subject to applicable tax and regulatory provisions. |
Explore: How Is FD Calculation Done?
What are the New FD Rules in 2026?
From October 1, 2026, the revised FD framework focuses mainly on clearer interest-rate disclosure and more consistent pricing across banks.
Key changes include:
- Same rates across branches: Similar deposits booked on the same day should get the same applicable rate across branches.
- Rates disclosed in advance: Banks must publish their FD rate schedules clearly before accepting deposits.
- Bulk deposit rates: Separate pricing rules apply to large deposits, with banks required to update applicable bulk rates regularly.
- Existing FDs continue as booked: Deposits opened before the new rules take effect generally continue under their original terms.
What are the FD Interest Rate Rules?
Banks can decide their FD interest rates, but they must follow RBI rules on how these rates are offered and disclosed.
- Same rates across branches: Similar deposits opened on the same date should get the same applicable interest rate across branches.
- No negotiated rates: Banks cannot offer individually negotiated FD rates to retail depositors.
- Rates disclosed in advance: Banks must clearly publish or display their applicable FD interest rates before accepting deposits.
What are the Rules for Bulk Fixed Deposits?
Bulk FDs are large-value deposits for which banks may offer different interest rates.
- For scheduled commercial banks, excluding RRBs, a deposit of ₹3 crore or more is treated as a bulk deposit.
- For RRBs, Local Area Banks and certain Urban Co-operative Banks, the threshold is ₹1 crore or more.
- For other co-operative banks, the threshold is ₹15 lakh or more.
- Banks may offer different interest rates on bulk deposits according to applicable RBI rules and their deposit policies.
What are the Fixed Deposit TDS Rules in 2026?
TDS may be deducted from FD interest when the total eligible interest paid or credited during the financial year crosses the applicable limit.
- The threshold is generally ₹50,000 for other resident depositors.
- For resident senior citizens, it is ₹1,00,000.
- From April 1, 2026, the relevant TDS provisions fall under Section 393 of the Income Tax Act, 2025.
- These are only TDS limits, not tax-free limits. FD interest may still be taxable even when TDS is not deducted.
What are the FD Tax Rules?
Interest earned from an FD is generally taxable and is added to your income for calculating your overall tax liability.
- Your FD interest is taxed according to the income-tax provisions and tax regime applicable to you.
- TDS is not the same as your final tax liability. It is simply tax deducted at source.
- Even when no TDS is deducted, you may still have to report and pay tax on FD interest depending on your taxable income.
What are the FD Premature Withdrawal Rules?
You may be able to close a callable FD before maturity, but the interest you receive can change.
- The bank generally recalculates interest based on the rate applicable to the actual period for which the deposit was held.
- A premature-withdrawal penalty may also apply.
- Banks set these penalties according to their approved policies and must disclose the applicable conditions to depositors.
- There is no single premature-withdrawal penalty that applies to every bank or FD.
What Are the Rules for Callable and Non-Callable FDs?
A callable FD allows premature withdrawal, while a non-callable FD generally requires the money to remain deposited until maturity.
- Individual term deposits of ₹1 crore or below must have a premature-withdrawal facility under the applicable RBI framework.
- Banks can offer non-callable deposits where permitted.
- Non-callable FDs may offer different interest rates because premature withdrawal is restricted.
- The exact rate and withdrawal conditions depend on the bank and FD product.
What Happens If an FD Matures on a Holiday?
If a term deposit matures on a non-business day, interest is payable for the intervening non-business day until payment is made on the succeeding working day.
For a regular term deposit, this additional interest is paid at the originally contracted rate on the original principal amount.
This prevents the depositor from losing interest simply because the maturity date falls on a non-business day.
What Happens to an FD After Maturity?
The treatment of an FD after maturity depends on the maturity instructions and the bank’s applicable deposit terms.
Depending on the instructions provided, the FD proceeds may be credited to the linked account or renewed according to the applicable conditions.
Depositors should therefore check the maturity and renewal instructions when opening an FD instead of assuming that every FD will automatically renew.
What Should You Check Before Opening an FD?
Before opening a fixed deposit, check:
- Interest rate and tenure
- Callable or non-callable status
- Premature-withdrawal conditions
- Applicable premature-withdrawal penalty
- Interest calculation method
- TDS implications
- Maturity and renewal instructions
- Nomination details
The latest FD rules provide the regulatory framework, but individual banks can have different deposit products, interest rates, and permitted charges within that framework.
Looking beyond fixed deposits for your savings? Explore the latest gold investment trends in India and understand how gold fits into a diversified investment strategy.
Disclaimer- The rankings and figures in this article have been compiled from multiple verified reports, credible news sources, and public financial data available as of 2026.
All values are approximate and may vary with newer updates, revisions, or changes in official records.
FAQs
The new FD rules 2026 cover areas such as interest-rate disclosure, uniform pricing, premature withdrawal and taxation. Some rules are existing RBI requirements that continue to apply in 2026, rather than entirely new rules introduced this year.
For deposits of a similar amount accepted on the same date, RBI requires interest rates to be uniform across branches and customers.
No. RBI’s deposit-rate framework states that deposit interest rates should not be negotiated between an individual depositor and the bank.
For scheduled commercial banks other than RRBs, a single rupee term deposit of ₹3 crore or above is currently classified as a bulk deposit. Different thresholds apply to certain other categories of banks.
Premature withdrawal is generally available for callable FDs, subject to the applicable conditions. RBI also requires term deposits of individuals for ₹1 crore or below to provide a premature-withdrawal facility.
No. Banks determine their premature-withdrawal penalties under their Board-approved policies and must disclose the applicable components to depositors.
The fixed deposit new rules require banks to follow their disclosed interest rate structure. Rates for comparable deposits must be uniform across branches and cannot be individually negotiated.
The key changes in FD rules relate to deposit rate transparency and the transition to the Income Tax Act, 2025 for relevant TDS provisions from April 1, 2026.
Under the bank FD new rules, premature withdrawal depends on the type of deposit and the bank’s policy. The applicable interest rate and any penalty should be checked before closing an FD early.
The bank pays interest for the intervening non-business day according to RBI’s prescribed treatment before the proceeds are paid on the succeeding working day.
