Yes. The interest earned from Fixed Deposits is taxable under the head ‘Income from Other Sources’. The interest will be taxed at the same rate as your gross income, which means it can vary from 0% to 30%. For example, if you fall under the 30% income tax bracket, you will have to pay 30% tax on the interest earned from your Fixed Deposit. But, if the interest earned does not exceed Rs. 10,000, then you don’t have to pay any tax on the interest. However, the amount invested in a tax-saving Fixed Deposit can be exempted under Section 80C of the Income Tax Act, with a maximum exemption of up to Rs.1.5 lakh per year. Tax-saving Fixed Deposits have a lock-in period of 5 years.