SBI has proposed a flat 15% tax on interest earned from fixed deposits, according to reporting by Business Today. It's a suggestion ahead of Budget 2027, not a rule yet.
For you, nothing changes today. Your FD interest is still taxed at your slab rate. If the idea becomes law, savers in higher tax slabs could pay less. Some low-income savers could pay more.
Key takeaways
- SBI has proposed a flat 15% tax on FD interest, as reported by Business Today.
- It's a proposal ahead of Budget 2027. It isn't law.
- People in the 30% and 20% slabs could save tax.
- People who pay little or no tax today could end up paying more.
- Your FD tax stays the same until the government decides.
How FD interest is taxed today
Interest on a fixed deposit (FD) counts as part of your income. You pay tax on it at your slab rate. That's the tax rate for your income band.
Banks also deduct TDS, which means tax deducted at source. For most people, TDS applies once interest at one bank crosses ₹50,000 in a year. For senior citizens, the limit is ₹1 lakh.
TDS isn't always your final tax. If you owe less, you can claim the extra back when you file your return. If you owe more, you pay the difference.
What a flat 15% rate could change
A flat rate means everyone pays the same share on FD interest. It doesn't matter which slab you're in. The headline says 15%. We don't yet know the finer details, like how TDS would work.
Here's a simple example. Say you hold ₹10 lakh in an FD at 7% a year. Your yearly interest is ₹70,000. The table shows the tax on that interest, before cess.
| Your slab | Tax today | Tax at flat 15% | Difference |
|---|---|---|---|
| 0% (tax-free income) | ₹0 | ₹10,500 | ₹10,500 more |
| 5% | ₹3,500 | ₹10,500 | ₹7,000 more |
| 20% | ₹14,000 | ₹10,500 | ₹3,500 less |
| 30% | ₹21,000 | ₹10,500 | ₹10,500 less |
The gain is biggest for people in the top slab. The loss is real for people who now pay little tax. Cess is an extra charge on tax, so the real numbers would be a bit higher.
Who is affected
Higher earners with big FD savings would gain the most. A flat rate would cut their tax bill sharply.
Senior citizens are a mixed case. Many rely on FD interest. Some pay no tax today because their total income is low. For them, a flat 15% could be a step back unless the rules protect small savers.
If you're a young saver building an emergency fund, your FD interest is small. The change would matter little to you either way.
Borrowers aren't directly affected. Your EMI depends on loan rates, not on tax on deposits. You can still plan with the EMI calculator as usual.
What to do now
Don't act on a proposal. Use this short checklist instead:
- Check which tax slab you fall in this year.
- Add up the yearly interest you earn from all your FDs.
- Compare today's deposit rates in our interest rate tables.
- Keep FD bookings flexible until Budget 2027 is announced.
- Follow the news hub for updates after the Budget.
Frequently asked questions
Is the 15% tax on FD interest confirmed?
No. SBI has proposed it, as reported by Business Today. Only the government can make it law, and that would come through a Budget or a tax change.
Will my FD interest be taxed less right away?
No. Your FD interest is taxed at your slab rate today. That stays the same until a new rule is announced and takes effect.
Who would gain most from a flat 15% rate?
People in the 30% and 20% slabs would gain most. People in low slabs, or with tax-free income, could pay more than they do now.
BankCreds analysis
What this really means for your pocket
The headline sounds like a gift to every saver. It isn't. A flat rate helps people in the 20% and 30% slabs. It can hurt people who pay little or no tax today.
Take a retired couple with ₹20 lakh in FDs at 7%. Their interest is ₹1.4 lakh. If their income stays under the tax-free limit, they pay nothing now. At a flat 15%, they could owe ₹21,000. That's why the fine print matters more than the headline.
Also remember that this is one bank's suggestion. Budgets don't always follow such ideas. Don't move your savings because of a proposal.
The better move this week is simple. Compare FD rates with other safe options, and check your own slab. The tax rate on interest matters less than the rate the bank pays you.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Business Today — originating report https://www.businesstoday.in/personal-finance/story/flat-15-tax-on-fd-interest-sbi-proposes-major-relief-for-bank-depositors-ahead-of-budget-2027-565336-2026-11-03
- Press Information Bureau — Official Budget and income tax announcements https://www.pib.gov.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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