TDS shall be deducted on interest paid on securities by the interest payer.
1. Time of Deduction- TDS to be deducted at the time of credit or payment, whichever is earlier.
2. Deductee- The interest receiver needs to be a Resident.
3. TDS Rate- TDS at a flat rate of 10% shall be applicable.
4. Threshold Limit : Latest Update – As per the Budget 2025 update, effective from 1st April 2025, the threshold limit has been mentioned TDS is not deductible for interest upto Rs. 10,000.
| Period | TDS Rate | Threshold Limit |
| Before 01/04/2025 | 10% | Nil |
| On or after 01/04/2025 | 10% | ₹ 10,000 |
If PAN is not furnished, then tax to be deducted at a higher rate.
5. Meaning of Interest on Securities-
- Interest on any security of Central Government or State Government
- Interest on debentures or
- Interest on other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act.
6. Cases when TDS shall not be deducted-
- Interest payable to Insurance companies.
- Interest paid by widely held company (where interest amount is not more than Rs. 5,000) subject to certain conditions.
- Any interest payable on a dematerialized security recognized by a stock exchange.
- Any interest payable on Central Govt securities or State Govt securities.
- Interest paid or credited on 8% saving (Taxable) Bonds 2003 issued by the Central Government (where interest amount is not more than Rs. 10,000).
- Where a self-declaration under Form No. 15G/15H is furnished by a particular person.
- Any payment made to New Pension System Trust.
- No deduction of tax from specified payment to notified institutions, association, or body, etc.
- No TDS shall be deducted at source from the payments of the nature specified under section 10(23DA) received by any securitization trust.
- Certain entities whose income is unconditionally exempt under section 10.