TDS is tax deducted at source. The payer keeps some tax and deposits it against your PAN. You claim it as tax already paid when you file. It is not the final bill. A refund or a further demand depends on the rest of your income, the regime, and the deductions the regime still allows.
Salary for FY 2025-26 is certified on Form 16, under the Income-tax Act, 1961. The due date was 15 June 2026. Other payments, such as bank interest, use Form 16A. For FY 2026-27 the salary certificate is Form No. 130, due 15 June 2027. Other payments in that year use Form No. 131. CBDT’s transition note is the source for those names. Using the new form number a year early is a common way to download the wrong PDF.
On a bank deposit, section 393 (this was section 194A) lets the bank deduct 10% when interest it credits crosses ₹50,000 in the year, or ₹1 lakh if you are 60 or older. The FD calculator shows why that collection is not your slab. A 30% slab plus cess on the interest is more than 10%. A person inside the rebate may be due a refund of the 10%. Match the certificate to the return either way.
A worked example
A cumulative FD of ₹1,00,000 at the example card rate earns interest of ₹6,398. At a 30% slab plus cess the tax on that interest is ₹1,996. Ten percent of ₹6,398 is less than ₹1,996. If the bank deducted 10% because the year’s interest crossed ₹50,000, the return still has a balance to pay. If the year’s interest stayed under ₹50,000, the bank may have deducted nothing, and the ₹1,996 is still due if that is your slab.
Salary works the other way round. The employer tries to withhold the whole year’s tax. On ₹15,00,000 in the new regime that target is ₹97,500. Check Form 16 or Form No. 130 against the income tax calculator. The filing guide says which year’s form name to use.
Mistakes people make
- Treating 10% TDS on interest as the final tax.
- Ignoring interest below the TDS threshold. No deduction is not an exemption.
- Looking for Form No. 130 while filing AY 2026-27.
- Claiming someone else’s TDS because the PAN on the deposit was wrong. Get the bank to correct it.
- Forgetting that a refund is claimed on the return, not by writing to the employer in July for a closed year.
The section
Salary withholding is certified on Form 16 for the year still under the 1961 Act, and on Form No. 130 under the Income-tax Act, 2025. Interest TDS is section 393 (this was section 194A).
Questions
Is TDS the final tax?
No. It is tax already paid. On a new-regime salary of ₹15,00,000 the bill is ₹97,500. If the employer withheld less, you pay the difference. If the employer withheld more, the return claims the difference back.
What is the TDS rate on bank interest?
Section 393, which was section 194A, lets a bank deduct 10% when interest it credits crosses ₹50,000 in the year, or ₹1 lakh if you are 60 or older. That 10% is not your slab. The FD example’s interest is taxed at the slab you type, plus cess.
Which certificate do I use this year?
Salary for FY 2025-26 is Form 16. For FY 2026-27 the salary certificate is Form No. 130. Do not hunt for Form No. 130 while you are still filing the earlier year.
Sources
Figures checked 28 Oct 2026.