Fixed Deposit(FD) is an investment product which allows you to invest a lump of money for a fixed time period and at a fixed rate of interest. It is quite popular form of investing in India. Overview of Fixed Deposits as the name suggests give an overview of Fixed Deposits, while Fixed Deposit and Interest Rates discussed the interest rates in FDs. When you open a fixed deposit with bank then you are lending money to the bank and it pays you interest. Applicable interest rates will be given as on the date of receipt of the funds by the bank and is fixed for the specified duration. And interest that is earned on fixed deposits is taxable in the hands of the depositor. Tax or TDS is deducted by the bank, after a threshold. This article throws light on Taxation aspect of Fixed Deposits.
Table of Contents
Tax Deducted At Source or TDS
If the aggregate interest income from fixed deposits that you are likely to earn for all your deposits held in all branches(before 1 June 2015 it was per branch) is greater than Rs 10,000 in a financial year, you become liable for TDS. TDS is deducted every time the Bank pays interest during the financial year and the interest earned for the year is more than Rs 10,000 in a single branch . in all the branches of bank from 1 June 2015. In addition, TDS is also deducted on interest accrued (but not yet paid) at the end of the financial year.For example, if an investor has earned Rs 20000 as an interest in one year, then the bank would deduct Rs 2000 and pay only Rs 18000 as the amount exceeds the limitation of Rs 10000.
A consolidated TDS Certificate in Form 16A, for TDS deducted during a financial year will be issued in the month of April of the following financial year. TDS Certificate shall specify valid Permanent Account Number (PAN) of the deductee, valid Tax Deduction Number (TAN) of the branch, Challan identification Number and receipt No of the quarterly statement. Challan identification Number means BSR code of the branch where tax has been deposited, date on which deposited and challan serial number given by the bank.
Some points to note for Fixed Deposits:
Tax liability for TDS is determined at branch level. One of easiest way adopted by many depositors is to spread their investments across various branches so that the interest earned in a particular branch is below Rs10,000 in a financial year.From 1 June 2015 TDS will be levied if the combined interest income from FDs in all branches of a bank exceeds Rs 10,000 in a year.- Tax liability is calculated on the first applicant’s name. Deposits held by minors are also subject to TDS. In this case the interest income will be clubbed under the income of the person in whose hands the minor’s income is included.
- Investors often book fixed deposits in the name of non-earning family members such as spouse. The rule is that if the money is gifted to a non-earning member and the deposit is booked in his or her name, then the person has to submit a declaration saying his or her income is not taxable. However, when income tax is calculated, it will have to paid by the donor or earning member
TDS on fixed deposits is deducted at the following rates for the following category of account holders:
| Type of Account Holders | TDS (%) |
| Resident Individuals, Sole Proprietorship, Trusts, Association of Persons,HUF under section 192 | 10% |
| Domestic Companies | 20.4% |
| NRO Deposits | 30.6% |
Avoiding TDS
Distributing FD investment:Split the FD to separate banks or branches of banks in such a way that interest earned from any of the FD does not exceed the Rs 10000 limits.This option no longer works as from 1 June 2015 TDS will be levied if the combined interest income from FDs in all branches of a bank exceeds Rs 10,000 in a year.- Timing the FD: The TDS can also be saved by timing the FD in such a way that interest for any of the financial years does not exceed Rs 10000. For example, a 12-month FD of Rs 1 Lac @ 10.5% could be started in September as the financial year closes on 31st March so the interest would split in two financial years, and hence TDS could be avoided.
- By Submitting Form 15G/15H
By Submitting Form 15G/15H
If you believe that your total interest income for the year will not fall within overall taxable limits, you should inform the Bank not to deduct TDS on deposits. You can do this by submitting a form as per the provisions of the Section 197A of Income Tax Act. Quoting from Section 197A
The Finance Act, 1982 has inserted a new section 197A with effect from June 1, 1982. The section enables an individual who is resident in India and whose estimated total income of the previous year is less than the minimum liable to income-tax to receive interest on securities, dividends and other interest without deduction of tax at source under sections 193, 194 and 194A of the Act on furnishing a declaration, in duplicate, in the prescribed form and verified in the prescribed manner. Rule 29C and Form Nos. 15F, 15G and 15H have been inserted in the Income-tax Rules, 1962 by the Income-tax (Fifth Amendment) Rules, 1982 prescribing the forms for the purposes of section 197A and laying down the procedure for furnishing the declaration form.
The forms required for different categories have been listed below:
| Category of Tax Payer | Income Tax Section | |
| Individual:Senior Citizen | Sub-section (1C) of section 197A | 15H (pdf) |
| Individual:Non senior Citizen | Sub-sections (1) and (1A) of section 197A | 15G(pdf) |
| Trusts/SocietiesAvailable from Assessing Officer | 15AASample form(pdf) |
Rule 29C of Income Tax Rules offers individual taxpayers the facility of furnishing Form 15G or 15H, as the case may be, requesting the payer of income not to deduct any tax. These forms have to be filed in duplicate and once the bank or the post office takes them on record, the entire interest is paid to the investor without any tax deduction. Important points that one needs to remember is
- Fresh forms are required to be filed each year. As incomes of investors may differ from year to year, the eligibility for furnishing the forms has to be ascertained every year.
- Secondly, for optimum benefit, these forms need to be furnished at the beginning of the fiscal such that the entire amount of interest escapes TDS. If the form is filed during the year, the tax already deducted cannot be adjusted against future tax deductions.
The main difference between Forms 15G and 15H is that Form 15G is meant for non-senior citizens whereas Form 15H is meant for senior citizens only.In order to be eligible to furnish Form 15G, the non-senior citizen investor needs to fulfill the following two conditions:
- The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil and
- The aggregate of the interest etc. received during the financial year should not exceed the basic exemption slab i.e maximum amount not chargeable to tax, which is Rs1,80,000 for men and Rs1,90,000 for women for.
If both these conditions are satisfied, Form 15G may be furnished to the bank or the post office and the entire interest income can be received without tax deduction.
Form 15H imposes just the first condition, in that, the final tax on the investor’s estimated total income computed as per the provisions of the Income Tax Act should be nil. The second condition imposed by Form 15G is not applicable in the case of Form 15H.
TDS and PAN Number
As per section 206AA introduced by Finance (No. 2) Act, 2009 wef 01.04.2010, every person who receives income on which TDS is deductible shall furnish his PAN, failing which TDS shall be deducted at the rate of 20%(as against 10% which is existing TDS rate) in case of Domestic deposits and 30.90% in case of NRO deposits
Please further Note that in the absence of PAN, as per CBDT circular no:03/11, TDS certificate will not be issued, form 15G/H and other exemption certificates will be invalid even if submitted and penal TDS will be applicable.
Ref:DNA:Start tax planning in the new financial year: Five things to do(Apr 2010), BCAJournal(Jun2010), Rediff
Interest and Income Tax
Interest earned on Fixed Deposits needs to be accounted for while filing your income tax returns for the year. Tax on interest of FD is as per the depositor’s income slab If TDS is deducted, it is at only at 10.2% for individuals for remaining part tax needs to be calculated. Interest income is under the head “Income from Other Sources” in the income tax return. TDS (if deducted) on the said interest income can be claimed by the individual in the income tax return.
Under the Act, an individual has an option to either offer income on cash (receipt) or mercantile (accrual) basis according to the method he regularly follows.
- Where you follow accrual basis for disclosing your income you could claim credit of TDS in the same FY since both in case of interest on fixed deposit with Bank tax would be deducted in the same year i.e. on accrual basis.
- Where the interest income is offered to tax on receipt basis i.e. at the time of maturity, you should be eligible to claim credit of TDS only in the FY in which such interest income is offered to tax. However, in such a case you must ensure that correct disclosure is made in all the forms (Form 26A, Form 16A) and returns (personal income tax, e-TDS) with respect to the year in which tax was deposited and the credit of the same is claimed.
How to get TDS refund. If your tax liability is nil, but the bank has levied TDS on the interest earned on your fixed deposit then you can claim refund by filing your income tax return. Customers can take their TDS certificates (Form 16A) from banks and also check the amount deposited to the Income Tax Depart-ment based on their PAN number on the Income Tax website under Form 26AS. Based on the same, customers can apply to get the refund from the IT department.
Tax Saving Fixed Deposit
There is difference between Fixed Deposit and Tax Saving Fixed Deposit. In 2006 Indian government announced bank fixed deposits booked by an individual/HUF for 5 years and up to Rs. One Lac or Rs. 100,00 will be eligible for exemption. This exemption would be under section 80C of the income tax act 1961. The interest rates on tax saving fixed deposits are generally calculated on a quarterly basis and the interest is reinvested into the fixed deposit. Ref:rupeetimes:Tax saver fixed deposits in India earn you more
Related Articles:
- Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund
- E-Filing of Income Tax Return
- After e-filing ITR: ITR-V,Receipt Status,Intimation u/s 143(1)
- Interest on Saving Bank Account : Tax, 80TTA
- Income From Other Sources :Saving Bank Account, Fixed Deposit,RD and ITR
Hope the post helped in understanding the taxation of Fixed Deposits
The budget has proposed that TDS should be levied if the combined interest income from FDs in all branches of a bank exceeds Rs 10,000 in a year.
Hi,
First of all, I really appreciate the knowledge you share, which help us to get awareness on various financial aspects. I have a question related to FD interest.
I had open FD of Rs. 1,00,000 in October 2016 for tenure of 1 year with interest rate of 7%.
The bank interest certificate showed accrued interest of Rs. 3500 till 31-March-2017 and accordingly had deducted TDS of Rs.350 for FY-16/17. While filing last year’s tax return, I had added this amount of accrued interest (i.e. Rs.3500) in the Interest income and calculated my tax.
In September 2017, the FD was matured and Bank deposited entire FD interest in my saving account minus TDS of Rs. 350. The net amount I received was Rs.7000-350-350 = 6300.
My question is;
While filing return this years’ return, Do I need to consider;
(a) entire amount of interest Rs.7000 OR
(b) amount of interest actually paid i.e. Rs. 6300 OR
(c) Deduct amount of Rs. 3500 from total interest (for the interest accrued last year and had paid tax accordingly) and consider only amount of Rs. 3500 this year for tax computation.
Also I am not sure how do I convince IT dept (if needed), because the Bank interest certificate shows Interest Paid Rs. 7000 and TDS deducted of Rs. 350 for FY-17-18. Please respond.
Thank You.
Hi, Any updates on this query? Please advise as early as possible as I need file ITR soon. Thank You.
Hello,
Apologies for the delay.
Yours is an example of when FD spans multiple years and you would get interest at the end of the tenure.
If FD interest is showing up in Form 26AS then you need to account interest in that year only.
So you need to show FD interest in 2 years
FY-16/17 Income from other sources of 3500, claim TDS of 350. Pay tax on remaining income as per your income slab.
FY-17/18 Income from other sources of 3500, claim TDS of 350. Pay tax on remaining income as per your income slab.
you have not answered clearly. bank statement given by bank to IT form 26as shows full interest credited.will IT dept deduct the tax paid for the accrued interest in the previous year.
As your FD spans multiple years interest accrued every year now shows up in Form 26AS.
So you HAVE to claim FD interest of FY 2017-18 only.
I assume you have claimed the interest of earlier year in ITR. Most of those who didn’t got a Income Tax Notice/
Do you need a loan? If yes then we offer all kinds of loans to private and public sector. For more information, Apply via email : olsonfinancialgroup@hotmail.com
Dear sir
I made an FD of 152000 on 11th nov 2014 and it will mature on 11 nov 2014 with amount 212000.
Total interest is nearly 60000 in 3 years….will it taxable..
I have not PAN number..
If i will submit PAN OR 15G will my whole interest will tax free or not??
Pls tell me
With the interest rate of 12.65 your 1lakh 52 thousand will grow to 220,854.
Interest on Fixed Deposit is taxable.
Bank deducts TDS when interest rate in a given year becomes more than 10,000.
If PAN is submitted interest is deducted at rate of 10%
If no PAN is submitted interest is deducted at the rate of 20%
If your total income in that year is less than 2.5 lakh(after 80C deduction) then you can submit Form 15G to avoid TDS deduction.
Your interest rate over various periods is as follows
2014-2015 7509.61
2015-2016 21202.31
2016-2017 23915.09
2017-2018 16225.99
TOTAL INTEREST 68853.00
If you look For Years 2015-16 till 2017-18 you have interest of more than 10000.
That means bank would have deducted TDS at the rate of 20% as no PAN is submitted.
Please visit/call the bank and verify.
Please apply for PAN and submit it to the bank.
Is your total income less than 2.5 lakh then the only way to claim TDS is to file Income tax return?
I made a fixed deposit in year 2015 which is a 5 year term deposit. Will i get a tax benefit for the entire 5 years tenure or the 2015-16 financial year?
Please provide me a link if it’s written somewhere.
You can claim the benefit only in the year in which you invest in Tax Saving Fixed Deposits. So if you invested in year 2015 only the prinicpal amount you can claim for 80C in 2015. In other years your interest would be taxable. Our article Tax Saving Fixed Deposits discusses it in detail.
get the details for Income Tax Calculator 2017, income tax refund calculator.
for more details click here
Income Tax calculator 2017
Income Tax slab is important for all taxpayers to calculate Total Income Tax Liability.
For more details visit
Income tax slab rates
MY WIFE HAVE A FD OF RS 4,50,000 IN COOPERATIVE BANK
SHE IS EARNING 40,000 INTREST INCOME , BANKER IS DEDUCTING TDS
CAN I SUBMIT FORM 15G
SHE HAD NO OTHER INCOME
Yes Sir, she is right candidate to submit form 15G/Form 15H. Else only way to claim TDS deducted is to file ITR.
Form 15G is meant for non-senior citizens whereas Form 15H is meant for senior citizens only
I have e- fixed deposit for 125000 fir 75 days in state bank of India do I to pay tax for it.
Yes Sir. Any fixed Deposit amount for any period is taxable.
Sir
I am earning member, i am working in private company, already i am paying tax yearly 15,000 minimum. Company will deducted the tax balance will get from my company.
Apart from that i am have saving in my bank account as A FD Around 5,00,000. Yearly i am getting FD Interest Approx. 40,000. i have submitted 15G in bank. so they are not deducted the tds.
I have invested in shares , this year till date i have approx loss 20,000.
40,000 income and Capital loss is 20,000. how will pay the tax for this case.
Please help me sir
Regards
Nanda
Sir I have one question
I am retired government officer I have fixed deposit of 23 lakhs and interest amount is 240000 per year I also get pension 18000 per month so how much tax i have to pay per year?
please help me
My mother had a FD of around 5 Lakhs which matured just before demonitization. Now the whole amount is in savings account.
Now in case i again make FD of the amount in savings account should that be a problem?
Please help.
No it should not be a problem. You have not deposited any old notes or black money.
Please go ahead and make the FD
My mother has few FDs. How to calculate taxable income on those FDs as all FDs have different start dates n maturity dates.
For e.g. If FD is for 400 days and interest earned is 40000 Rs in those 400 days.
Then while calculating income for 1 financial year i the income comes out to be 36500.
Is my calculation right?
It depends on when you started the FD. You can try HDFC bank calculator which gives break up of interest in Financial year.
For example if you open FD of amount 1 lakh on 5 May 2016 which is due on 5 Jul 2017 at 6.25% then interest in different financial years are:
2016-2017 5687.18
2017-2018 1719.82
TOTAL INTEREST 7407.00
I am earning member, i am working in private company, already i am paying tax yearly 15,000 minimum. Company will deducted the tax balance will get from my company.
Apart from that i am have saving in my bank account as A FD Around 5,00,000. Yearly i am getting FD Interest Approx. 40,000. i have submitted 15G in bank. so they are not deducted the tds.
I have invested in shares , this year till date i have approx loss 20,000.
40,000 income and Capital loss is 20,000. how will pay the tax for this case.
Sir, I read ur article and almost all the comments but didn’t get want I need. Here is my question and details.
FD amount :30 Lakhs
Interest amount :2,80,000
No other source of income.
TDS deducted : Rs 28,000
As per the tax slab, the tax should be 10% of the amount exceeding Rs 2.5 Lakhs = Rs 3000
Difference of massive Rs 25,000
is it right ?
So do i need to file tax return to get the refunds or is there some other method/ procedure ?
Thanks
Yes you are right, based on Income you are in 10% slab if you are less than 60 years of age.
If you are between 60 – 80 years of age your minimum exemption limit is 3 lakh.
If you are less than 60 years Total tax due is 1030 , including cess, because of Rs 2000 as Tax Credit available only to Individual Resident assessees having total taxable income upto Rs. 5 lacs
Break up is given below.
You can avoid the tax too by investing 10,000 Rs in tax saving under scheme like ELSS, Life Insurance, PPF etc.
You can submit Form 15G to bank so that tax on FD is not cut. Then you not need to file ITR.
For TDS deducted only way to get tax is to file ITR and claim refund
Exempt Income :250000
Income chargeable at 10% :30000 is 3000
Total 280000 Tax is 3000
Less: Tax Credit (Available only to Individual Resident assessees having total taxable income upto Rs. 5 lacs) :2000
Income Tax + Net Surcharge :1000
Education Cess @ 3% of (Income Tax + Net Surcharge) 30
Total Income Tax liability 1030
Thanks for the quick reply. 🙂
Case study for, not charging penalty for Interest on FD not included in Income unintentionally for Year 2013-14, tax on which is paid in Current Year.
What is the RBI’s Order to Banks reg deduction of TDS against FDs on different branches of same Bank where everything has been mentioned in 15H?
Sir, I am a Govt pensioner with a/c at SBI. Every year I used to submit return on the basis of TDS cert.issued by the bank.I have some FDs for which TDS deducted.One huge amt of interest was credited falsely for which there was no source. Accordingly 10% TDS was deducted with other deduction of TDS aginst FDs.TDS Cert issued.I have one Tax svgs Dep. of Rs one Lakh.On verification of TDS cert I objected. After 2 months fresh TDS was issued decreasing the amt in such a way that Interest credit(w/o source)& TDS remained the same ie, 100% TDS. I/T return submitted with claim of refund.My wife has an account (1st name)jointly with me in other SBI br. The matter was referred to Reg. office as well as to GM/ customer care at Mumbai & also to BO/ RBI/Kol but of no response. The TDS amt deducted from the Interest amt of Tax svngs dep. In addition the amount also deducted from the principal amt of Tax svngs dep of Rs 1,00,000.00 which now reduced Rs 91,724.00. To manage anyhow of this irregular trxn, the falsely deducted TDS amount divided in 2 parts. On one part 20% deducted on accrued interest though PAN given. On other part for the balance amt deduction mentioned as” TDS on previous Interest”. But there was no such amt against that a/c & bank failed to locate which were the previous amts. The matter now lies with DCDRF( Consumer forum). I want to know is it justifiable to deduct from Principal amt & permanently decrease of amt.I got refund a portion of TDS from I/T.Whether I am proceeding in the right way. Now I only want that my principal amt may be revived to original amt of Rs 1,00,000.00 with the accrued interest. Pl give me proper guidance.
No reply received. Your reply to my aforementioned queries will be highly appreciated & great helpful to me.
Apologies for the inconvenience.
We don’t have expertise in this matter.
Best of luck. Hope you get the prinicpal amount
Thanks for your response.Sorry to disturb you.
My grand father had opened FD in my name (name before marriage). It is matured. What will be tax treatment if I deposit them in my bank account ( opened after marriage).
Is there any clause in ITR by which I can get exemption in tax.
Can you please advise.
My mother have 6 FDR amount of 10.2 lacs, 15 days back she break the FDRs and received cash from bank, now due to demonitisation she wants to deposit it back to bank account, Sources of FDR is savings and gift from me over the years, (I am a salaried person (10 lpa), I received my salary after deduction of tax after which i gift a portion of it to my mother). Is there any issue in depositing the cash of 10 lacs in her account back.
You should not have any problem. You can easily account for source of your income.
Please keep documentary evidence ready just in case.
HI,
I HAVE DONE ONE FD FOR 3 LAKHS. 2015 NOV – 2016 DEC(13 MONTHS). ITS TAXABLE ON RATE OF INTEREST. THIS YEAR, MY SALARY INCREMENTED. I WANTED TO FOR TAX SAVER FD. MY SALARY IS 9.3 LAKHS NOW. I WILL FALL UNDER SECOND SLAB. I HEARD, IF I GO FOR FD, WILL TAXABLE AS 20% (AS PER SECOND SLAB) OR WILL IT FALLS UNDER FIRST SLAB ONLY. GOOD YOU PLEASE PROVIDE SOME LIGHT ON THIS. HOW DO I PLAN FOR 2 LAKHS FD. ONE FOR TAX SAVER AND ANOTHER FOR AGAIN 1 YEAR FD.
I wish to make a fixed deposit of Rs. 50000 * 2 for 5 years at Govt. sub-treasury under Govt. of kerala in my native district. They give only 9 % interest per month. If I do this, shall I become devoid of TDS.
I closed some of my FDs in July 2016, for the interest of which I want to pay income tax; the bank did not deduct any tax. I want to know under what head I have to pay tax for AY 2017-18: advance tax or self assessment tax? I tried to pay the full tax under self assessment tax for AY 2017-18 through a bank; but the bank says the computer is not accepting it. Does it mean what I have to pay is under advance tax? If so, should I pay it only in installments? Or can I pay it fully now? Should I pay any penalty?
Thanks so much.
Sir if your tax in the year is more than 10,000 then you need to pay Advance Tax.
FY 2016-17
For both individual and corporate taxpayers
Due Date Advance Tax Payable
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax
Thanks so much. Would you please help me one more time? I was not able to pay advance tax on my interest income till now. If I pay the entire tax (Rs. 90000) before September 2016 (that is, in August 2016) as advance tax, should I pay any penalty for not paying advance tax before 15th June? Please also tell me how much penalty I will have to pay. Thanks a lot.
Sir, my mother received 20 lakhs after my father death ,among which 10lakhs she made fd and remaining amount stay in saving bank account.As she is senior citizen I want to ask 2 thinks.
1.As 20 lakhs is received after her husband death will this amount will be taxable.
2.if it is not taxable will I be able to deposit more 10 lakh rs into her account(10+10). How tax will be calculated on it.
I had ten number of FDs in a local cooperative bank with different dates of maturity during 2014-15. I was not able to renew them after the maturity dates in 2014-15. The bank was not deducting any tax at source. This month (July 2016) I closed all the FDs and converted into one FD. I want to pay income tax on the interest I earned. My query is for which year I have to make the payment: 2014-15 (the year of maturity dates) or 2016-17 (the year I received interest)? If 2014-15 (assessment year 2015-16), should I make the payment according to the maturity date of each FD or can I pay 30 % of the total interest for that year (I belong to the 30% bracket)? Thanks so much.
The interest is to be shown under “income from other sources” this year (on the receipt basis). Compute the tax and pay the tax due as self assessment tax for 20216-17 Ay. Then file the return
Really helpful. thanks a lot. Regards.
Hi,
Actually i have taken FD(Tax Saving) for 5 years.This FD will applicable for all 5 years to reduce the tax or do i need to apply separate FD’s for each year. I am in dilemma. Could you explain me in detail. Thanks in advance
It will be applicable only for the year, in which amount is invested. BTW, interest out of these Tax Saving FD is taxable and not tax free
Tax saving Deposit Schemes are special category of fixed deposits where the investor gets the benefit of a tax break when they invest a sum of money in the deposit. It is different from Fixed Deposits of 5 years As this is Fixed Deposit tax saving is only for the principal amount that you invest, interest is taxable. On investment of 1 lakh one in 30% tax slab saves 30,900 , on investment of 10,000 one saves 3,090. But tax has to be paid on interest earned 5228. Our article Tax Saving Fixed Deposits discusses it in detail.
Hi, I need some help with filing the IT returns. The TDS on the fixed deposits is Rs.1011 and the total interest income according to Form 16 A is 10110. I am showing this interest income amount of 10110 as ” Other income amount” and Rs.1011 as “Sch TDS2 – Details of Tax Deducted at Source from Income OTHER THAN Salary” in my tax filing. Now the total tax payable is calculated at a different slab i.e 20%. Is this correct? Can you please help me understand this scenario?
This is correct. You can go through our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund for understanding it
I am giving a bank statement of a FD account
29/12/14 amount deposited Rs 32000
31/3/15 Credit Interest Rs 70
31/3/15 TDS Rs 70
29/12/15 Credit Interest Rs 2735
30/12/15 TDS Rs 211
31/3/16 Credit Int. Rs 64
31/3/16 TDS Rs 64
I want to know that (i) what amount should I show as Income and TDS for FY2015-16 in IT Return??
(ii) also, what percentage bank deduct on 31st march??
(iii) bank paid Total Interest 2735, bank should have deduct 274 as TDS, which not happened, why??
There appears to be an error in the above. Check the Form 26AS. If the TDS is 345 as given by you then the interest portion may be 3450. You have to add the interest earned on FD adn show it as income from other source and compute the tax. Any shortfall is to be made up by paying the Self Assessment Tax and submit the return.
Tax exemption on fd+rd is below 10000 or 10000 each for fd and 10000 for rd.
No exemption. Exemption is only for SB accounts interest upto 10000. Interest earned/accrued on RD/FD are fully taxable.
The exemption of Rs 10,000 a year under Section 80TTA applies only to the interest earned on the balance in a savings bank account. You are supposed to declare it in ITR and then claim the deduction. Our article Interest on Saving Bank Account : Tax, 80TTA talks about it in detail.
Report Interest income and Pay TDS if due :Though interest earned from fixed deposits, recurring deposits, even taxsaving bank deposits and infrastructure bonds, is fully taxable,people often do not report any interest income below Rs 10,000. You may read our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund for more information.
Another common misassumption is that one need not pay tax as TDS has been deducted on the income. Remember that the tax deducted by the bank at source is at a flat rate of 10%. However, tax slabs may vary. So, if you fall in a higher tax slab, your liability may be more and you will have to pay the balance while filing returns. You need to recalculate your liability and pay balance TDS. The department can catch such mistakes by matching your ITR with Form 26AS.
I am a Central Government employee. My office (DDO) deducted Income Tax under 20% tax slab on my salary paid to be. My tax liability is now ‘NIL’.
I have also a FD with Nationalized Bank and now I came to know that RS. 5248/- as interest on my FD has been credited as on 31.3.2016.
I have not informed my employer (DDO in my case) income from other sources.
My question is that:
(i) whether I have to mention Rs. 5248/- in my Income Tax Return?
(ii) If yes, whether I can now deposit the tax on Rs. 5248/- as last date 31.3.2016 has already been over?
(iii) whether I may wait for other remedy?
Hope you will answer my all questions.
1. Yes you have to mention Interest from FD in your ITR
2. You can pay self assessment tax. As total tax due is less than 10,000 you don’t have to pay any penalty.
You would have to pay self assessment tax before submitting your ITR. You need to pay self assessment tax, enter details in ITR and then submitting your ITR.
Last date for payment of self assessment tax is 31-Jul-2016
3. There is no other remedy. Please verify that Interest from FD is showing in your Form 26AS.
Please go through our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund
List of all the income tax articles can be found at http://bemoneyaware.com/income-tax/
Dear Sir, I have same issue as stated above. The only difference is that my DDO has applied excess TDS for my regular salary to the amount of Rs. 12000/- and that amount is due for refund. Now my tax liability under self assessed tax for interest earned on Saving deposit and term deposit is Rs. 700/-. Do I need to pay those Rs 700/- by challan and then again claim 12000/- as tax refund ?
Sir catch is ITR is processed based on what is in Form 26AS.
Interest on Saving account is exempted upto 10,000 Rs under section 80TTA.
So now see how much is tax interest is on term deposit.
Theoretically yes you should add income from interest on FD as income from other sources and then if there is a refund which means extra tax then net tax or refund would be less.
Example you have interest from FD as 500 and refund as 10,000.
Net refund would become Rs 9500.
as the amount is too less and there is no TDS for interest in income in Form 26as you can ignore this right now if the ITR has been submitted.
(i)You have to mention Rs.5248 in your tax returns under income from other sources.
(ii) Calculate the tax liability with this addition and if tax is due, compute the same and pay it under Self Assessment Tax for 2016-17 Assessment Year with an addition of about 2% extra as the first quarter of this year is over on 30/6/2016.
I am
I had three RD accounts in Canara Bank. Bank credited interest in these accounts on 31-03-2016 and later on reversed the interest credited on 31-03-2016 in April 2016. Bank has not credited back the interest reversed in April
2016 eventhough I have lodged a complaint with them. Only reply they have given is that it is a technical issue and DIT Wing HO Bangalore is looking into it and it is not known when and how much interest will be credited back.
Interest credited on 31-03-2016 is reflected/included in the interest Paid Certificate issued to me. Please advise me about the taxability of interest credited but reversed in next financial year. Please treat the matter as urgent as I have to file
I T R for FY 2015-2016. Please also advise me whether there can be in implications/complication if I exclude the interest amount so involved from my income for FY 2015-2016. Regards Jagat Narain Gupta mobile 9198506077053,919810855755
Interest from RD is taxable as per your your income slab so you will have to show it sooner or later. Interest earned on RD is taxable under the head income from other sources.
if your applicable income tax slab rate is either 20% or 30%, you would be required to pay the balance taxes (net of TDS) by way of an advance tax or self-assessment tax.
Effective 1 June 2015, the entity paying interest on RD has to deduct tax at source on the interest earned. Hence, TDS at the rate of 10% is applicable if the interest income during the relevant financial year exceeds Rs.10,000.
Have you applied for Cumulative Payment then you will get interest at end of your RD Term.
Please check whether your Form 26AS is showing the interest on RD. If yes then please include it in the TDS section of ITR1.
Our article What to Verify in Form 26AS? discusses how to verify that TDS in Form 16/Form 16A matches PART A of Form 26AS
Our article Fill Excel ITR1 Form : Income, TDS, Advance Tax,Self Assessment Tax shows how to show RD interest in ITR1
Sir my query is regarding RD interest credited on 31-03-2016 but later on reversed in April 2016 and not credited back till
date despite my lodging a complaint with the bank. No reasons given by bank for reversal of interest and no information
Given by bank how long they will to take to resolve the complaint/problem. Interest credited on 31-03-2016 is included in
Interest paid certificate for FY 2015-16. Interest credited on 31-03-2016 is reflected in Tds certificates but the amounts do
not match with the amounts in the Interest paid certificate/ entries in the RD accounts. Also it is not known that interest reversed will be reflected in interest paid certificate for FY 2016-17 or not. I request you to advise in the light of these
facts whether I should include the interest credited on 31-03-2016 but reversed in April 2016 in ITR for FY2015-16 or
not. If not what can be the complications/implications.
Jagat Narain Gupta. Mobile 918506077053, 919810855755
Show the TDS in col 7 and reversed amount in col 10 of ITR-2 (18C under TDS).
Hi sir
I have three FDA’s in pnb bank.each is maturing on different months I.e. one in sept. Other in October in 2016 and last in June 2017. I want to know when my TDs is cutted off this year or next .
Also my last FD is of 150000 and others are below 50000 .
Pls let me know about my TDs.
Thanks.
Sir if interest on FD in a year is more than 10,000 TDS is deducted.
So please either send details of FD, when it was opened, amount, interest rate
or calculate how much would you earn interest on FD in the current year.
Collect the TDS certificate from Bank if not yet receieved by post. Alternatively you see see the same in Form 26AS.
Hiiii…cn u please help me out
I am doing job and my package is if 175000 okk…..I had a saving account with other bank n I hv a FD of 500000 for 3 yrs with 7% interest…… do I need to fill 15G
Assuming a 7.65% interest rate, your interest income from FD will be above 10,000 Rs.
hence TDS will be deducted unless you submit Form 15G.
As your total income , salary + FD is less than 2.5 lakh you are not required to fill ITR.
If TDS is deducted the only way to get it is by filing Form 15G.
So if you want to avoid that hassle submit form 15G.
Please check if TDS was deducted for earlier years
A very good article.. Still I have one query unanswered. If I have a FD for 2 years, TDS will be calculated for that FD on each finacial year end or it’ll be calculated on the maturity amount?
It is calculated for each year. If interest is below 10,000 Rs a year, you can choose to show interest as Income from other sources on maturity.
But if interest is more than 10,000 Rs a year, TDS will be deducted its better to claim interest income every year.
Do bank file “NIL DEDUCTION OF TDS” when Fixed deposit interest earned in a financial year is less than Rs.10,000/- which can be seen on TRACES/TDSCPS website?
For example, I will be earning Rs.9,995 as a fixed deposit interst on f.y. 2016-2017. Will this amount will reflect in TDSCPS/TRACES/26AS under my PAN Number?
Please revert back.
Interest earned in FDs are taxable and only SB account interest is tax free upto 10,000.
Interest from fd is more than 300000/ but if i submit adv tax can i submit 15h in bank?ihave no intension to avoid tax
No. Calculate the advance tax taking into conideration the TDS.
Respected sir
My father retired with some amount i want to know how much tax i have to pay if we fix 50 lakh and how much interest we get on monthly basics
Sir,
I have an fd of 30 lakhs with interest rate of 7.5% in south Indian Bank for 400 days ,sir I want to know the income tax, that how much I have to pay please send the details.
Dear sir, I am retired bank employee ( citizen) has various term fd in bank for the period of one year to three years, every year on 31/3 bank issues certificate of Amount of Intrest paid / Accrued , please advise me while calculating income, whether I) Intrest paid during period ii) Intrest accrued or both to be taken for calculating income.
Also advise me under what section
Sir Interest from FD comes under Income from Other sources.
You need to calculate both Interest paid + Interest accrued.
Please note that that TDS is deducted at rate of 10% when interest is above 10,000 Rs. This is what comes under interest Paid.
The interest which is not paid is Interest accrued.
Does a current account holder having a limit can fill form 15 g for fdr of Rs20 lacs?
Retirement savings in the form of bank FDs of twenty years of a harmless single woman engineer stolen allegedly by security, intelligence agencies(CBI) without a court order or legally valid reason. Please help to trace the officials involved in the theft and recover the money.
Please approach the bank for duplicate FD receipts as you have lost the FD certificates.
I filed my ITR 1 with income from other sources showing interest income from FDs which are in my name. TDS was cut by the bank on these at 10%. However I have now received a defective return filed notice under section 139 (9) . Apparently, I have to pay still more tax on the FD interest as my tax bracket is 30% and TDS was 10%. Can I now apply for a HUF pan card after making a HUF affidavit showing creation of the HUF from my date of marriage ( apparently even without an affidavit HUF is deemed as created from date of marriage). On getting the Pan card can I then file its tax returns for the previous two years with all interest from FDs being shown as its income. My doubt is if I get the pan card in a months time say can I then file its tax returns for the previous two years? Also at this stage how do I change the FDs from my name to that of the HUF? Would the bank allow that if I applied to the bank to put all interest and the FDs on maturity in a newly opened HUF bank account?
It is late now , it would be simple to just pay the due demand.
Who can form HUF?
Any Hindu, Sikh, Jain or Buddhist man can form an HUF, provided he is married. In fact, an HUF is automatically constituted when a couple exchanges wedding vows. Still, there are a few simple formalities to be completed for the HUF to function as a legal entity (see graphic).
The first step is to form a corpus for the HUF. This can be any capital asset (property, gold, jewellery, securities, deposits) or cash. This is not as easy as it may sound. You can’t transfer just any asset to your family ‘hotchpot’. Any personal funds or property given by an individual to the HUF will lead to clubbing provisions under Section 64 (2) of the Income Tax Act. This means the income from these assets will be treated as that of the individual, thus defeating the very purpose for which the HUF was established.
The HUF can be formed with money received as gifts from relatives. But there’s again a tax implication here. While there is no tax on gifts received by an individual from specified blood relatives, the HUF does not enjoy this exemption. The HUF is not an individual, so it has no relatives. Any money it gets will be treated as a gift from a stranger. If the value of the assets received as gifts in a year exceeds 50,000, it will be deemed as income of the HUF and taxed accordingly
Hi,
I earned money from oil&gas Job through overseas and i am maintaining Savings Joint account(my wife included) in Indian Overseas Bank around 30laks.I don’t have any NRO or NRE account. Basically my salary transferred through Telegraphic transfer to my savings account from overseas. Both are carrying PAN card. So now i have a plan to convert Fixed Deposit in the same Bank with the amount 30laks. 1.How much need to pay for income tax from my Interest and what should i do further? 2.Is there any additional documents need to submit? 3. If i buy any property can i use this money completely by mean of ready cash or need to apply any loan to avoid income tax problem? 4. If i maintain in Savings account always,will make any income tax problem in future because my job completed now.? I don’t want to face any legal problem with this money. I have a perfect source of Income proof with me. Please advice me clearly and need right answer for my individual questions.
Hi Sir,
My mom is a senior citizen, unemployed wants to keep an Post office time deposit of Rs 5,00,000 at 8.4% interest rate. Is there any TDS deducted from the interest gained annually?
If she puts in 5 lakh for 1,2,3 or 5 years yearly interest is Rs 43873.98.
There is no tax deducted at source (TDS).
hello sir i m doing business n i want to know i have saving of around 2lack 87000 so how musch tax i will have to pay this year
When you say that you have savings , how is the saving invested and what are you earning on your saving.
For example if your saving is invested in FD then interest from FD or Fixed Deposit is considered as income.
It would be added to your income from business or profession.
If total income is less than 2.5 lakh then you don’t have to pay tax.
If income is more than 2.5 lakh-5 lakh then you would have to pay 10% tax.
Our video Income Tax,Income and Income Slabs gives an overview of income tax
Dear I am getting a pension 2lac 10thousand annualy and I m having a fd’s of 35 lac that is my gratuity interest on them is 3 lac 15 thousand and I am a senior citizen how much tax I have to pay.
I m getting a pension of 2lac 4 thousand and have fd’s of 30lac @ interest 9% am I liable for tax
Yes You are liable to pay tax.
Your total income is : 2 lac 4 thousand + interest on FD around 9 lac = around 11 lac
For senior citizen between 60 to 80 years, and super senior citizen the various income tax slabs for AY 2016-17 are as follows
Slab Income for Senior Super Senior
10% tax 300001 to 500000 –
20% tax 500001 to 1000000 500001 to 1000000
30% tax above 1000000 above 1000000
So if we consider your income as 11 lac you fall in 20% or 30% tax rate.
You can reduce the tax outgo by investing in 80C , 80D .
You can go through our article at Filing ITR : Video on which ITR to fill for more details
DEar Sir
I have a query…. if i made 20 lakhs fixed deposit in a certain bank, will i liable for income tax?
Can we invest in multiple banks to avoid TDS deduction from the new rules. For eg. instead of investing Rs. 100000/- each in various branches of a particular bank, is it wise invest Rs. 100000 in several banks to avoid TDS. the rules interest accrued in all branches of a bank and not says interest accrued in all banks. Kindly clarify
Hi,
Your Posts are really very useful and informative. Can you please clarify mine below query .
Say a person got retired and got ten lakhs amount,now he had transferred amount to his wife who is a house wife (not earning) and made FD on her name.As interest exceeded 10000 rs TDS was deducted.Now can she file IT and claim refund TDS amount.What investigation IT department do,whether they ask from where you got this money .If the wife says she got money from her husband then Does retired person has to file IT ,please tell me.
Thanks in advance.
i want to open FD in bank of around 8-10 lac in my sister account which is unemployed. guide me whether should i fill 15 g. which ITR form should i fill. she has pan card.
That’s a great thought.
Assuming your sister is an adult i.e above 18 years of age.
You are gifting money to your sister. Just have a simple document with both your signatures.
the interest income from the bank FD will not be tax-free . It will not be taxed as income in the hands of your sister, who is non-earning and therefore likely below the taxable income threshold.
Assuming a 8.2% interest on 10 lakh invested, interest earned is shown below
2015-2016 590249.76
2016-2017 893561.90
2017-2018 971025.87
2018-2019 1053130.67
2019-2020 1144614.52
2020-2021 354753.28
If you sister wants to save TDS she would have to submit Form 15G.
Hi,
Lets say I am investing rs 1 lac ( 100000 /-) in fixed deposit for 24 months at an interest rate of 8.35 percent.
The interest gained per year will be as follows :
2015-2016 6299.49
2016-2017 9137.39
2017-2018 2535.12
TOTAL INTEREST 17972.00
In this case, interest gained in any year is not exceeding 10k per year.
My two queries here :
a) as interest earned is not exceeding 10k, should any TDS apply?
b) I am falling under 20% tax bracket, so how much tax will be deducted even if my interest earned from FD for a particular year is less than 10k?
Please give suggestions.
Thanks,
Arnab
you will have to pay 20% tax since you fall in this bracket as the interest earned from FD is fully taxable. and added to you total income
thanks
Sir Interest of FD is fully taxable as per your income slab irrespective of whether TDS is deducted or not.
please show interest earned every year as Income from Other sources.
My employer paid cess and deducted rebate under 87A but for bank interest, Bank has not added 3% cess and considered rebate. So that will not match with schedule TDS. So in ITR1 income details it will show additional Rs. 40 on scheduled TDS. Is it necessary to pay Rs. 40 or can be carried forward. Is it necessary to match Tax payable and TDS1 and TDS2?
Pl. Help.
Sir tax on FD is fully taxable as per your income. Yes Bank does not deduct the 3% cess so you have to account for it in your tax calculation.
You should enter full interest on FD in Income from other sources and actual TDS deducted as in Form 16A and Form 26AS
Dear BeMoneyAware,
Apparently, there is a 3-ring circus with bank and Central Government acting as monkeys while the depositor plays the fool. After literally months of banging my head as I crunch numbers, the idiocy of the Indian system is clear as day. My hope is that you make sense of this, as I am at a loss and have no more brain cells left to figure it out. There are millions of Indian in the same boat, and it is embarrassing to see so little CORRECT information.
I am a US citizen with NRO accounts in India. These FD’s (fixed deposits) mature in 1.5 to 2 years. There is a LOT of confusion out there as to how to report interest. Some say to report it as accrued even when bank has not actually paid you nor paid TDS (30.9%) to the Central Government. When reading the Income Tax Department FAQ, it says very clearly that banks do not deduct TDS on quarterly/yearly basis, they can do so IN THE FOLLOWING YEAR. It further states that they will not be held in default for late payment, and neither will there be any adverse consequences to taxpayer where banks fails to deduct TDS. Ultimately, taxpayer is still held liable for tax. So it appears from all that language that a taxpayer can report interest received/taxes paid when banks (monkey #1) reports to Central Govt (monkey #2), and this will be reflected on Form 26as.
Now this is where we Indian FOOLS come in. We’re told by many sources, to report interest as accrued. Taking the accrual approach, I would report interest I haven’t received into my account nor has it been entered on Form 16a or 26as. And if I report accrued interest, then it follows I have to report accrued tax! In other words, it seems I have to pay a REAL 30.9% tax on that “phantom interest” to the Central Govt. How is this fair or correct? Both monkeys are playing the fool! The bank fails to deduct TDS on purpose, and the Central Govt doesn’t punish them. On the contrary, they want us to pay self-assessment tax using challans! Instead of paying interest quarterly and deducting taxes on same, the banks place unnecessary burden on their depositors!
Still others say to avoid all the above and just report on maturity. Or better, just report whatever you see in Form 26as. As long as interest/tax reported matched 26as details, you will be good. But if those two monkeys are not going to follow their own laws, then it throws a monkey wrench in USA REPORTING REQUIREMENTS! In US, out foreign tax credits are valid only for tax years to which those taxes are applicable; and for those of us who have FDs that span multiple years, there is no way to avoid double taxation when those two monkeys can’t get this right!
Please, please, please….respond kindly with thoughts/advice. I’m quite sure that many are in the same boat as I. And we will all appreciate someone who still has some brain cells left.
Sir so true. It is so confusing for an ordinary person and unknowingly many end up being defaulters. But things are improving slowly but surely.
While we can raise these issues question is how to address the problem.
So if I make FD in which in 1st year interest is less than 10K so no TDS will be deducted but in 2nd year TDS is more than 10K then TDS will be deduced. But will TDS be deducted for income of only second year or both year? Let us dig up the answer to this question. What do you say?
i am a banker ,,,,one of the customer having a fixed deposit with us since last financial year…according to her he never submitted 15G form and she wanted for TDS DEDUCTION but our end SYsTEM not deducted TDS for any resion. how we rectify the issue
Thanks.
We don’t think you can help. If she hasn’t submitted Form 15G TDS will be deducted.
my wife has made fd from her fathers gift amount and earns interest of rs3,00,000 ,what is tax exmption & tax she has to pay
As the gift is from father not from husband or father in law the amount is now her money. Post gifting and any income derived from this gifted amount is taxable in her name. So the FD interest will be taxable in your name only.
As it will be above the exemption of Rs 2.5 lakh she will have to pay tax on interest earned.
Our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund explains it in detail
Thanks for various information received in this blog.
I have some quiries:
1) I retired on 31st January,2015 and received I/Tax reflection in Form 16 up to 31st January,2015.
2) My Pension has yet not started but the Pension amt. for Feb & March, 2015 will fall under FY 2014-15.
Now kindly tell me the procedure how the I/Tax for FY 2014-15 should be computed and reflected in the I/Tax Return ? Awaiting for your reply Pl.
Suppose I fixed Rs.2.5 Lakh In Bank in April, 2014 with rate of intt. 8% . Which is non taxable income.
Now I earned Rs.2,70,000 in April 2015 and duly reinvested in FY 2015.
Now question arise that what will be my income to reflected in FY 2015 ?
Is it Rs. 2,70,000 or 20,000 (earned as interest on FD)for FY 2015 ?
Pl. reply
Interest that is earned on fixed deposits is taxable in the hands of the depositor as per the income slab not the principal
It will be 20,000 as that is your income.
Our article Fixed Deposit , Interest , TDS, Tax,Income Tax Return, Refund explains it in detail
Thanks for different relevant reply up to the satisfaction.
Now I eager to know whether rolled over FD Amount is treated as Income for the same Financial Year ?
As example:
1) I fixed an amt. of Rs.1 Lakh at Bank @ 8.5% in FY 2014
2) The rolled over amt. of FD Rs.1,08,500 is re fixed In FY 2015
Now Rs. 1 Lac was computed as Income for FY 2014.
Whether the total rolled over amt. Rs.1,08,500 will be computed as Income for FY 2015 or only 8,500 earned on interst ?
Kindly let me know at the earliest pl. e-mail : pkdey1955@rediffmail.com
hello,
1. i want to get one thing clear that if any fixed deposit which is for 3 years then i have to get the interest calculated for each year among the 3 years and show it in my ITR….or i have to show in only that year in which my fixed deposit is getting matured i.e. after 3 years?
2. if any FD is getting mature and if i am not taking that matured amount inplace of that i am extending that fixed for some more years then also i have to show the interest as my interest income.(if i am extending the fix deposit without taking back principal+interest amount)???
Very interesting questions
1. If Fixed Deposit spreads over multiple financial years then there are two cases
a) when interest each year is more than 10,000 so bank will deduct TDS at the rate of 10% and it will show up in Form 26AS; In such a case please show interest in the same year so that TDS is claimed.
b) when interest each year is less than 10,000 bank will not deduct TDS so you can opt whether u want to pay interest every year or at maturity.
2. The Fixed Deposit if extended is like a fresh investment in the year that got extended.
Suppose one made FD in FY 2009-2010 say Jul 26 2009 for principal amount Rs 1,00,000 at rate of 8% and it got matured on 26 Jul 2012. Maturity amount was 126824.18 (if compounded quarterly) with 26824.18 as interest. So if one extends on 27 Jul it would be considered as Fresh investment with principal of 126824.18.
Did we explain your queries satisfactorily?
I am not quite cleared on your reply. My question was about Principal income. Say I Invested 2 lakh on FD for FY 2014 and interst earned @ 8% was 16000 for FY 2014-15.
Now I reinvested the total amt. i.e. 216000 for FY 2015-16.
Again I invested Rs.2Lakh in FY 2015-16.
What will be my total Income for FY 2015-16 to be reflected in ITR ?
Pl. clerify.
I did not get reply regarding quiries for total taxable income may be accrued due to roll over of FD in next FY as posted earlier — pl. reply.
What income is eligible to get benefit of u/s 87A ? Is it Gross Income or Taxable Income ? — Pl reply.
In a Financial year some portion is taxable under 1) Service earning and some portion of income from Pension.
—— Procedure for filing IT Return may please be computed with example. Many thanks anticipating your reply.
I fall in 20% IT slab. I have earned around 73,000 as interest from Bank fixed deposit. For this part bank has deducted 7,300 as TDS. I have 2 questions
1) I have to deposit 10% and surcharge more on 73,000 as I fall in 20% slab. So, was i supposed to pay advance tax as the total tax liability exceeded 10,000 (please note 7300 has already been deducted as TDS by Bank in the financial year 2011-2012). If yes then will i will have to pay penal interest?
2)A bit non official. If I don’t show this interest income in IT return, what are the chances of getting caught ( the TDS is being reflected in 26AS)
Pankaj answer to your questions
1.Yes you have to pay penalty under section 234A,B,C as your income-tax due was more than 10,000. Our article Examples of Income Tax Calculation explains similar situation(interest on saving bank account) with example. Let us know if you still have some doubt.
2. With all financial transactions being tied to PAN number it is difficult to escape income tax. Better pay and sleep in peace.
Thank you sir for your quick reply.
I have seen your example. However , in my case already Rs 7300 has been deducted as TDS by bank and my liability is around Rs 7500 more.ITax does provides a cushion of Rs 10000/-( if I am correct), will that cushion not applicable for me. Moreover when I am filling the online form of IT dept , it is not showing any penal interest for this amount. Please guide me.
Thanks again for the advice on 2nd question. I was wondering whether IT dept does matches data for small tax payers like whose taxable income is just above 5 lakh
It is possible that because of your FD and interest on saving bank account you need to pay tax. If the tax owed is less than 10,000 Rs then there is no penalty.
So as you rightly said cushion of Rs 10,000 is applicable to you. You just need to pay self-assessment tax for the amount due.
We have shown the case in the example for filing ITR
Coming to your second question:
You never know. For people who file their returns it is easy to validate and catch. Last year people got notice for amount as little as Rs 1.
Times of India: No need to respond to tax notices for below Rs 100(Jan 2012)
I cannot understand your clarification. I have earned Rs 15000 as interest from Savings+ account, for this the bank recovered a corresponding TDS of Rs1500. I come under 30% tax slab. According to the Examples of Income Tax Calculation I should consider the whole of Rs 15000 for self assessment tax. But based on the above comment can I avail a cushion upto Rs10000 so that only Rs 5000 is taken as taxable interest income?
Shanti thanks for asking.
Let me clarify Entire 15,000 is taxable.
Cushion of Rs. 10,000 is for advance tax payment. If the total tax due by a tax-payer in the year is more than 10,000 then tax-payer has to pay advance tax else he is liable to pay Penalty under section 234(A,B and C).
Advance Tax:Details-What, How explains it in detail.
Hope it clarifies. Else please ask your doubt again.
hi,
I am a house wife. My interest on FD is Rs.10980 and TDS deducted by bank is Rs.1427. I have my Form16 from bank and the same amount is reflected in my form 26AS . I want to get back my TDS amount as I have no other income. What form should I use to do so? what is the procedure to E-filling income tax?
Chandrani Just answer a simple question : How did you get money to invest in Fixed Deposit. If it was given by your husband then there might be case of clubbing of income. If interest on FD is to be treated as your income then Google will give you lot of info on The process of efiling . Our article Income Tax Overview explains the process in detail. Comparing also govt and private sites.
Cleartax is allowing women to file income tax return free of cost.
Some links which might be helpful to you are:
How to file your taxes online using the Income Tax India website? Efiling your income tax in simple steps
Thanks for sharing detailed information on taxation!
I am salaried individual & Form 16 is issued from my organsiation. I will be glad if you could clarify my below query:
1. My SB account is linked to FDs – Few are monthy interest payable & few are cumulative. I had given Form15 in middle of the year(which now I understand is not required?!)and now I have Form 16A from Bank for 3 quarters. I have asked for the Interest income details from bank. How should I calulate my Tax in this case?
2. I have investments in shares. Have got Short term capital gain Tax & LT.. report from them. Should I pay tax only on ST Capitial gains at 15%? Pl let me know.
Thanks Prakash just trying to help people with what I have struggled over the years.
1. Please verify that TDS given in Form 16A matches with Form 26AS.
1a. Interest on Saving Bank Account and Fixed Deposit is taxable as per the income slab. Please go through our article Examples of Income Tax Calculation.
2. You have Short Term Capital Gain so as you rightly said you need to pay tax at rate of 15%.
As you have Capital gain you have to use ITR 2.
Thanks for your reply!
Few more queries:
1. The TDS is matching in Form 26AS with Form 16A given by bank. But I am not sure how to calculate my interest income. Since all my FDs are linked to my SB I got a interest income certificate from my bank. Should I take that as reference and calculate tax as per my Slab?
2. In that case can I deduct the TDS amount and pay the difference as tax?
3. How is dividend income from equity taxed?
4. How is short terms capital gains from liquid funds taxed?
Due apologies for taking undue privilege and shooting questions! Even after the simplification exercise mortals like us are not able to really understand the taz implications…
Prakash asking question is the sign of thinking and we don’t mind it at all. We are in same boat as you – we are learning through writing about the answers to the questions that we came up with.
We don’t know about how to do it because we were not taught so please don’t belittle yourself.
So keep on shooting questions and we shall try to answer them with the best of our abilities.
Ans to your queries now.
1. Yes you can take TDS deducted as reference. Form16A (and Form 26AS) show the interest earned on which 10% tax was deducted.
2. Yes you have to claim 10% tax deducted and pay for remaining amount as per your income slab.
3. Dividend from equity is TAX -FREE so it is not taxed. It comes under Exempt income in Income Tax Return.
4. Short Term Capital gains are taxed at 15%.
You can go through our article Filling ITR 1-Form and Filling ITR-1 : Bank Details, Exempt Income, TDS Details to get some more idea.
Hi,
I’m new to this site, Your site is very informative.
I have some queries.
I want to know how much money i have to deposit in bank under any scheme so that my parents will get monthly income of Rs. 15000 including deduction in Tax.
I want to give them a monthly income so that they can retire from work. Also they are not senior citizens and this will be their only source of income.
Please suggest me how much amount i have to deposit, which bank and under which scheme…
Expecting your reply…
Thanks
Bank has deducted income tax on accrued interest on my FD during FY 2011-12 thought the deposit is due for payment with interest in FY 2012-13. I would like to show the income Under “mercantileor cash” and not on accrued basis. I intend not showing any accrued interest during 2011-12 (FY), which will be shown in the year of receipt and use the TDS for computation of tax (to get refund) during 2011-12 FY. Is it allowed? I prefer to opt for ‘receipt’ basis as I have retired in April 2012 and my income has come down by about 50%!
Sudarshan Bank has to deduct TDS at the rate of 10% if interest on FD in year is more than 10,000. You also have to pay Tax on interest of FD as per your income slab. As your FD spans multiple financial years you can pay Tax each year on interest earned and claim TDS. It is possible to choose method of accounting but we are not sure of how TDS claim would work across Multiple financial years. Methods of Accounting throws some light on it.
If you come across something please let us know.
Hello sir,
Bank has deducted TDS on FD but principal + interest will be paid to me in FY 12-13 as per schedule of FD.
Shall I ask for the refund or there is any other process.
Please help me out!
Regards,
Ashish
Ashish Bank has to deduct TDS at the rate of 10% if interest on FD in year is more than 10,000. You also have to pay Tax on interest of FD as per your income slab. As your FD spans multiple financial years you can pay Tax each year on interest earned and claim TDS. Methods of Accounting discusses it in detail.
my bank has deducted TDS for Rs.1200 towards interest accrued on FD. the TDS is 10% only and 3% cess has not been deducted. since the interest is accrued and not paid does this TDS can be considered as advanced TAX. do i need to show this in my present IT returns or can I show it in next years returns when the interest amount is actually paid. if i need to show this amount in present year as 3% cess has not been deducted how should i account for it? can i pay it now? if so then who? pl help.
thanks & regards
Your observation is correct, Bank just cuts TDS at 10% but does not cut 3% cess.
Yes this tax can be claimed as TDS already deducted not as Advance tax( which is paid by individual before specified dates)
You have an option of declaring interest based on what method of accounting you use-Cash or Mercenatile. FD spreading over the multiple financial years have been discussed in detail in Methods of accounting: Mercantile and Cash
We suggest claiming TDS as reflected in Form26AS -easier to maintain.
Coming to 3% Cess not deducted:
Is 10% only TDS due to you. The interest on FD is based on your income slab. This is explained in detail in If TDS is cut you still may have tax liability in our article Basics of Income Tax Return.
Whatever tax is due(if it is only 3% cess also) you need to pay it.
how to pay the cess amount? is it through challan 280? if so then which field i have to fill in it either tax or cess ?can i fill the balance cess amount in cess field and leave the tax field zero?
Srikant we are curious -only cess why do you need to pay?
There is a row for paying cess so what you said is right. Fill Cess and leave tax field zero.
What to do if the tds on bank interest is not reflected in 26AS of it department. My total tax deducted at source by the office is also not properly reflected in 26as. What is to be done?
Sir A question
What do you mean by tds on bank interest ?
Bank does not cut TDS on interest in saving bank account. or Recurring DepositBut bank deducts TDS for interest on Fixed Deposit.
If TDS in Form 26AS does not match Form 16 given by your employer, please get it fixed by your office ASAP. Your office just has to revise return.
Similar query discussed here
SimpleTaxIndia has details about the Form26AS Mismatch. Please go through it.
Sir,
I earned about Rs 36000 through home tutions,Rs 9000 as part time lecturer,Rs26800 as interest from fixed deposit and Rs3626 as interest from savings bank during fin year 2011-2012.Have i to pay tax on my income please?
Regards,
Nalini.R
Nalini as you income is less than the income tax limit (1,80,000 for men and (1,90,000 for woman below 60 years for FY 2011-12) you need to file income tax return. If interested Checkout the examples of income tax calculation
Sir,
if a person’s source of income is only from fixed deposit done by him in the bank and he is not under the tax slab to pay the tax, and he had submit form 15H to the bank and bank had also not deducted any tax from him. Then is he had to submit tax return to IT department or not? Suppose his interest earned from bank is 20,000.00 in a financial year.
I have some queries.
I have received form 16A from my bank stating the interest credited against the TAX SAVING FD as Rs. 13418/- with TDS deducted as Rs. 1342/-. I have to file my IT return now.
a). Do I have to include this interest amount under Income from Other Sources?
b). If I include this interest amount under Income from Other Sources, the Income Tax Payable is being calculated as Rs. 1422/-. Does that mean that I have to pay this as additional tax. FYI, I fall under 20% tax bracket for salaried male. And the income tax from salary has already been paid and matched.
Awaiting earliest response so that I can go ahead with filing my IT Return.
Satendar answer to your queries
a) Yes you have to include 13418 as Income from other sources.
b)As you are in 20% slab you should be paying 20% of 13418 as tax = 2683.6
c) TDS at 10% has already been deducted to you can claim the TDS of 1342 = 1342.6
d) You have to pay tax on remaining amount i.e 1342.6 before you file Income tax return.
Just a question How did you arrive at figure of 1422?
Verify that TDS cut by bank is reflected in your Form 26AS.
Thanks for your response. After entering the salary related information and taxes. I checked and validated the ITR-1 form (excel downloaded from Income Tax website) which matched. Then I went on to add the FD Interest as ncome from other sources and added TDS deducted in the TDS section and clicked on Calculate Tax button to get th value of 1422.
Thanks for the answer. Without more information it is difficult to say how it arrived at 1422.But if ITR Excel sheet says 1422 then please pay 1422 as income tax.
Dear sir
I am an Agriculturist. My annual agriculture income is Rs.3,50,000 i dont pay tax since this is not liable to pay tax.
This year May 2012 i have deposited Rs.3,00,000 as fixed deposit for 1 year at 9.5 percent. It will fetch Rs.30,000 as interest. I have given 15H to avoid TDS.
Do i need to pay tax for this entire income? since i have both agriculture income as well as Fixed deposit interest income. What is my tax liability?
:
As your non-agricultural income does not exceed the exemption limit , Rs 1,80,000 for AY 2012-13 you are not liable to pay any tax irrespective of amount of agricultural income.
As I am not an expert in Income tax law, the suggestion is based on what I have read. Please do verify with an expert and if possible update us.
Thank you very much sir.
Thanks for replying. Please do verify with an expert and if possible update us.
Hi. My parents hold a fixed deposit which is in both names – primary & secondary. Would the interest earned be shown as income for both (50% each) and tax filing done accordingly or should it be shown only for the primary holder?
Thanks in advance
Rosalee a very good question.
As you guessed rightly the primary account holder is responsible for interest earned through Fixed Deposit. Reason being he/she is one who had put money for the investment.
But if the fixed deposit is opened by person with his money in name of his wife or a minor child as the primary holder then the interest would be added to income of the person who put the money. This is called Clubbing of Income.
This article Clubbing of income might be of help to you.
Please update us on whether clubbing of income applies in your case.
Thanks. The source of funds is from sale of house. The house was in the name of my mother & she has paid the necessary LTCG taxes. However in the mentioned deposit, she is the second applicant. So would that imply that the interest earned should be shown as her income as per the Clubbing concept? Thanks in advance.
Sorrr Rosalee this seems to be a difficult question for me to answer. I would suggest asking Chartered accountant(CA) or Income tax expert for clarifications.
Sure…Thanks
i have a fd, on account of which rs 5000 has been deducted as tds now which itr(1, 2, 3,4) i should fill to get the refund. i have no other source of income.
ITR-1 Form is to be used by an individual whose total income for the assessment year includes:-
(a) Income from Salary/ Pension; or
(b) Income from One House Property (excluding cases where loss is brought forward from previous years); or
(c) Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses).
So as your income is only for FD which comes from Income from Other Sources you need to fill ITR -1 form.
I want to show the interest earned out of my saving bank account while filing the returns. When I add this interest as other income and calculate the tax along with my salary, it is coming as I need to pay around Rs. 14000 tax. Now I am willing to pay this through challan 280 before 31st July and then file the returns. In this regarding, do I need to pay any interest amount on Rs. 14000. If so, how I need to calculate.
As this income is of “interest on bank saving account”. I won’t be knowing the exact income till 31st of March, when I see the credit into my a/c. Doesn’t income tax interest really applicable? When I fill the same in ITR-1 (SAHAJ) and click on “calculate tax”, it is calculating some interest amount to be paid.
Please clarify on this.
To add to this, my employer deducts all the tax for my salary and their is no due for the same. Now I need to pay only the tax liable for my income other than salaries ie saving account interest.
Kavitha have added an article Examples of Income Tax Calculation . please go through it and if you have doubts or need clarification let us know.
Hello Sir,
Actually my TDS is more than my tax payable amount, as I have flat registration after the investment submission in my organization.
Now I am filling e-return. Which documents should I attach with the form to send to tax department.
Only registration/stamp duty document or all the documents that i submitted to my employer also required to submit.
Please advice me.
Thanks in advance 🙂
Maam you do not need to submit any document while filing e-return , you just use it for filling. You might be required to show it if a discrepancy is noticed or case comes up for scrutiny. You need to keep documents for atleast 6 years.
Thanks Sir!
You mean we just need to sent the “ITR-V” to income tax dept – Bengaluru.
If you e-File without digital signature, the duly signed ITR-V form is to be submitted to CPC Bengaluru using Ordinary Post or Speed Post within 120 days of transmitting the data electronically. This completes the Return filing process for non-digitally signed returns.
Address of CPC is
CPC Bangalore
Post Bag No.1,
Electronic City Post Office,
Bengaluru, Karnataka-560100
These instructions might be helpful
Hi,
My father is retired. He has only income from Fixed deposit.
Bank has taken tax from him. He is a senior citizen. He didn’t submit 15H form and pan card with them.
What document do i need to attach while reclaiming this tax.
He is not come in any income tax slab and if the interest rate is greater than 10,000 still can bank cut TDS from his account?
Yes the bank is right in deducting the tax as interest was greater than 10,000 and your father had not submitted Form 15H and PAN Card.
To reclaim the tax you need to file Income tax return . No document needs to be attached. I hope the bank has given you Form 16A for TDS.
Sir / Madam,
I also had the same problem. But my bank gave me Intrest Certificate only, which shows the intrest given to me by bank. In that case how to get refund from IT Dept. ?
whether Bank can give Form 16A / TDS certificate as they had deducted 20% of intrest given without PAN number ?
If not, Then How I can get my 20% TDS refunded as my income is lesser than 1.8 lac ?
Now, I get the PAN Card, this problem is rectified by me.
Regards,
Nitin Sood
Based on our understanding
Once the bank cuts the TDS amount, it’s not in bank’s hands to reverse as it’s the tax authorities who need to pay back.
As tax has already been deducted and deposited by the bank, the only recourse for the assessee is to file a refund claim in Income Tax return.
Similar query has been answered at CAClub
Hi,
My father is retired. His only income come from Fixed deposit. He didn’t submit 15H form to the bank for the year 2011-2012. Bank has taken TDS 2479 from his account.
What document do i need to attach while reclaiming tax amount? is it 15H form and pan card?
Suppose interest is greater than 10,000 and his anual income doesn’t come in to income tax slab can bank still deduct TDS from his account? Please help.
Thanks for information.
thanks for being quite informative…plz answer my question.
1.Does the pension earning by house wife come under subjection to income tax?
2.IF the person has income from all sources near about 2.9 lakhs per annum , which shows he/she is subjected to income tax but at the same time having investments of 1 lac under various section for tax rebate…so ( 2.9 lac- 1 lac = 1.9 lac) which is tax free.so is it compulsory for him/her to file return?
3.IF a person is having four FIXED DEPOSIT of 50,000/- each at the rate of 9% p.a in a same branch of bank under FLEXI SAVING A/C then individually he is not subjected to tax but overall will TDS applied to him?
sir plz answer these questions of mine…i will be grateful to u….
Sam
Pension is described in Section 60 and Section 11 of the Pension Act as a periodical allowance or stipend granted on account of past service, particular merits, etc. Pension received from a former employer is taxable as salary. As such the relevant provisions of TDS as specified in Section 192 and other relevant provisions are also applicable to pension income and tax is deductible on the same, as in the case of payment of salary.
Article Income Tax on pension would be helpful to you.
So in calculation of income tax use the pension like income from salary and calculate.
Hence the various deductions will also apply.
While calculating the exemption limit please include interest from the Fixed Deposit also.
The exemption limit for SENIOR CITIZEN(Between 60 yrs to 80 yrs) is 250000 and For Very Senior Citizens(Above 80 years) is 500000 for Assessment Year 2012-13.
We are not sure about FLEXI SAVING Account so please verify with the bank itself and update us if possible.
thankyou sir,
what is the exemption limit for female below 55 years of age for this current year ending on march 2013?
i didn’t got my answer sir..if a person comes under exemption limit after making investments of 1 lakh in lic,ppf and all.then at that tym does he /she has to file return n show that he is taxable but after making investments he got a rebate and now he is not taxable.
Exemption limit for women is 190000.
The purpose of deductions etc. is to reduce taxable income. So if after applying this taxable income becomes less than exemption limit then the person will not have to file income tax return.
The fixed deposit calculator will help you to calculate TDS.
The calculator will help you to calculate the tax for this assessment year.
THANKS ALOT DR…
I have an FD with an NBFC and the yearly accrued interest income comes to about Rs 9761 as per 26AS form.. The NBFC deducted TDS as the amount is more than 5000. My questions are as follows:
1. Since the interest is less than exemption limit of Rs 10000, Should I pay tax on this amount.If no, can I claim a refund on the TDS deducted by the NBFC.
For Fixed deposit with NBFC
If the aggregate interest income that you are likely to earn for all your deposits is greater than Rs. 5,000/- in a financial year, you become liable for TDS, subject to submission of Form 15G for individuals and 15H for senior citizen
TDS simply means Tax has been deducted at source.
If your total income (after various exemptions and deductions) comes less than minimum exemption limit you can claim refund on TDS. Please see whether your income is less than minimum exemption limit if not then you might have to pay MORE tax as per the income slab
Hi,
Just a quick question….My account in a bank was created during my college days without PAN card. Last year, 20% TDS was deducted on my FD’s in the same bank though my income fall under 10% slab. I had submitted my PAN Card details now and received form 16(a) from the bank for that deduction. Now, Am I applicable for refund of over 10% TDS by including these details in Income Tax return.
Appreciate your prompt response!!
krishna TDS is tax deducted by the bank and is paid to Central Govt. If your income is below the exemption limit then you can claim the TDS by including the details of TDS in income tax return.
Hi, I have gone through the blog and it is very informative. I have two questions :
1. I have savings accounts in several banks and the total interest on them is coming to around Rs. 20,000. As TDS is not applicable on savings account, obviously their is no TDS deducted. I fall under 30% slab because of my salary. Now, I want to show this interest while filing of returns. Do I have to pay 30% of Rs. 20,000 as the tax ? if so under which challan I have to pay the same .
2. I have couple of FDs spread across different financial years (sept 2011 till sept 2012). Now, while calculating for taxes, how do I know the accrued interest for the financial I am filing returns. From where can I get the required information?
Thanks for kind words. Coming to your questions
1. Yes interest on Saving Bank account is taxable as per your income slab. Pay using challan 280 as it is for paying income tax.
2. Bank deduct TDS on FD interest if FD interest in financial year is more than 10,000. If TDS is cut on the FD for the financial year bank should give you Form16A and it should be reflected in Form26AS.
If interest in FY is less than 10,000 you have two options:
1. Pay on maturity (called as cash accounting)
or
2. Calculate the interest yourself for every year and pay it every year. (called as mercantile accounting)
This is explained in our article Methods of accounting: Mercantile and Cash
Note: Next year i.e FY 2012-13 or AY 2013-14 No tax will be charged on interest earned on balance in savings bank account subject to a maximum of Rs. 10,000 per year.
Thanks for the response. Another question in the similar lines …
Myself and my wife have a savings account. I want to show the interest as other source of income while filing returns. Can I show all the interest income in my wife’s IT returns as she being a salaried and fall under 20% bracket and I fall under 30% bracket. Is this a legal procedure?
Surendranath interest for saving bank account will be added to income of the first holder of the account. If it’s your wife then she can claim it. As for income tax you and your wife are two separate entities and income tax will be taxed on income of each individual (with some exceptions like loan , gift etc)
Hi,
You shared a very nice information. Most of my doubts got cleared. My income under Head salaries is 490000 and Fixed deposit interest is 21430 for which 2152 tax has been deducted at source by bank. In this regard i have 2 queries. Plz clarify
1. Should i need to include 21430 as income from other sources or (21430-10000) = 11430?
2. If i add 11430 or 21430, i am moving into slab 20% from 10% as total income > 500000. but the bank has deducted only 10% Tax. Should i need to pay the extra tax my own. If so, by what form (like for 280 or 282)
Request you help in this regard so that i can file my returns
Umashankar
1. You should include 21430 as the income from other sources.
2.If you come into 20% slab you need to pay extra tax on your own as only 10% has been deducted. Use challan 280 to pay tax.
Just clarify that you have done required deductions from salary. Ex under 80C your EPF contribution , your PPF contribution or under 80CCF is you bought infrastructure bonds etc so your net salary can be less than 490000.
Check out the article
Understanding Form 16: Part I , Understanding Form 16: Chapter VI-A Deductions
Understanding Form 16: Tax on income
Thanks for the promptly response. The income of 490000 whihc i mentioned is after deductions of around 78000 (EPF + VPF LIC) only. Since i was not knowing he interest on fixed deposits (since the intererst calculated is on accured interert in multiple deposits) i was not able to plan my savings. If i had know the bank interest earlier i should have saved more under 80C or 80CCF.
Is there any way to find what can be the approx accured interest on my fixed deposits. To clarify on my fixed deposits, these deposits are created by bank automatically for 1 year leaving a min of 5000 Rs(I mean auto sweep facility)
No I don’t know of the way to find the approx. accrued interest? Is the TDS for FD part of auto sweep facility reflected in your Form 26AS?
Of Which bank do you have auto sweep facility?
Yes the bank issued 16A and it is reflected in 26AS..Auto sweep facility is with SBI
Thanks for answer.
Is it the saving plus account? the reason for asking is the quantum of money put in FD. For example
The minimum threshold you need to maintain in your savings plus account is Rs.5000. Above Rs.5000, starting from a minimum amount of Rs.10000 (and then in multiples of Rs.1000), all amount will be converted into a fixed deposit.
Best way is to ask bank about interest paid certificate for last financial year.One can not calculate it manually.banks can issue interest paid certificate on request of customer.
Welcome back Paresh and thanks for input. Some doubts
1) What is interest paid certificate- Form 16A?
2) When should one ask for certificate- after the end financial year?
Its not form 16A..16A carries details of tax deducted at source.
Banks can issue interest paid or (added for cumulative type) certificate for deposits based on customer Id / Pan number….Just request the bank about it…
Second question is not clear..We can demand it for any period like last financial year from 01st April 2011 – 31st march 2012.
We can keep it for future reference as well.
What is the name of the certificate? Is it for interest on Fixed Deposit or for what purpose?
My question was whether I can ask for interest one might get year in advance say for FY 2012-13 on Fixed Deposit provided I don’t break it. To help one plan tax saving
We require “interest income” of last financial year to show it as income from other sources while filing the returns.
In one of the above comment, reader asked about calculating the interest for last financial year …. my opinion is that rather showing it something approximate,demand certificate from the bank.(Just I viewed my certificate and its tagged as Interest Paid certificate for the period ……)
I identify the confusion now.
You are thinking about calculation of interest in ongoing year and about submission of 15G/H form.
I was thinking about calculation of interest in last financial year to show it as income.
I think I have misunderstood the discussion.
Bang on. Yes wanted to predict the interest for next year so one can make necessary investments now and save tax
@ Admin :Yes it is savings plus account. anything above 5000 Rs will convert into FD for 1 year.
@ Paresh : I want to know approx FD in advance so that i can plan my tax savings accordingly.
Yesterday i found out a way for that. It is nothing but calculating the daily interest for each FD and multiple each FD with the no of days before taxation date (ie 31st march)
Eg : a FD created on Sep 1 2012 with 100000 Rs @ 9% interest for 1 year. For each day accured interest is 2 Rs. The first taxation date is 31 mar 2013 ie 212 days from sep 1. So interest for 2012-13 is 5230 Rs and for next year will be 3797 rs (154 days from 31 mar 2013 to maturity date 1 sep 2013). Similarly cal for other Fd’s and add all of them.
I have done the same for prev year and it was matching approx with the amount of TDS deducted …
Great Umashamker. I was planning to do same.
Sorry mistake daily accured interest for above example is 25 Rs ..not 2 Rs..
Though I do not understand the issue clearly,my general opinion is that if any one is in taxable bracket then let get tax deducted at source…
I agree with you Paresh. But last year a friend of mine faced a problem the bank gave him Form 16A showing TDS but was not updated in Form 26AS till Feb 2012. He got letter asking to pay tax on TDS claimed.
Will check up with my bank HDFC
Tax is deducted even if ur fds in diff branches of the same bank.Am i wrong?
As explained in the article:
Tax liability for TDS is determined at branch level. One of easiest way adopted by many depositors is to spread their investments across various branches so that the interest earned in a particular branch is below Rs10,000 in a financial year.
Tax liability is calculated on the first applicant’s name. Deposits held by minors are also subject to TDS. In this case the interest income will be clubbed under the income of the person in whose hands the minor’s income is included.
So if you have spread your investments across different branches of the bank then TDS is deducted if interest for that fixed deposit whose interest exceeds Rs 10,000
I had 2 nos. Querry as stated below:
1. I had earned 12000 interest on FD by bank. Bank had deducted TDS on FD as the interest exceeded 10000. While filing return should i had to show the interest earned as 12,000 or (12,000-10,000= 2,000)as upto 10,000 no tax is payable. Can i calculate tax on only 2,000 amount while declaring on filing income tax return.
2. After death of my father the amount fixed in bank was transferred to my mother account. She is working women and liable for tax as per rule i.e. his income is above 1,90,000. She had transffered the whole amount of 6.00 lacs in the name of my sister for the purpose of her marriage. My sister is not in the slab of income tax as she is not working. My sister has valid PAN card.In this case what is tax liabilty toward my sister/mother.
Thanking YOu.
Query 1:I had earned 12000 interest on FD by bank. Interest on 10,000 or 2000.Bank had deducted TDS on FD
Entire amount of interest earned is taxable. So in your case tax will be applicable on Rs 12000.
But as tax has been deducted, you can claim TDS in your calculations.
As explained in my article Basics of Tax Deducted at Source or TDS
The concept of TDS envisages the principle of pay as you earn. Tax must be deducted at the time of payment in cash or cheque or credit to the payee’s account and it’s Advantages are
It facilitates sharing of responsibility of tax collection between the Deductor and the tax administration.
It ensures regular inflow of cash resources to the Government.
It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.
Income of the deceased after his death is taxed in the hands of the legal heirs inheriting the respective assets. So your mother would be taxed and as she has transferred it to your sister , your sister would be taxed.
But if your sister is an adult then the interest earned from the amount will be taxable only after it crosses the exemption limit (which in Assessment Year 2012-13 is Rs 1.9 lakh annual income.)
If your sister is not an adult then her income would be clubbed with that of her mother.
Please verify and if you could update us that would be helpful to other readers
Very helpful information …….much appreciated One thing still not clear is the full deduction of the tax money from the FD – when I have submitted the required documents. Should I write the bank? I never filed income tax in India…is it possible to file the tax online.
Nesha the Interest on FD is taxed for NRE and TDS is at 30.9% . Due to DTAA TDS is lower than 30.9% but is not 0. Hence TDS of 8921 has been deducted. You can surely ask the bank.
Yes you can file tax online. Please read the article on Economic Times : NRI liable to file tax.
A suggestion, talk to your CA and get his suggestions for we don’t want to be penny wise and pound foolish.
Please keep us updated
Thanks for the information. Sorry, I am getting back late. It because I am still trying to find out what causes ICICI bank to deduct full tax amount even after submitting the DTAA forms and all – not to mention very disappointed with their customer service (I still don’t have answer). Anywhoo, based on my CA friend – I should transfer my NRO FD to NRE FD (i guess there is new law out there now which makes it possible for NRIs) by submitting couple of forms. I am visiting India towards end of the year; but my FD is not maturing until July 2013 – i guess i have to pay penalty if i choose to convert it to NRE FD (but probable less hassle compare to what I’m facing now). Can someone refer me a good bank for NRIs?
Have a wonderful weekend everyone.
Nesha.
Thanks for getting back Nesha.
Benefit of DTAA can be availed only if NRI has submitted valid PAN details, proof of residency and other documents as prescribed within specified time. This link talks about, maybe it will help Tax-Declaration-Forms-for-NRO-Deposits
Yes Interest on NRO deposit is taxable, Interest on NRE deposit & FCNR deposit are exempt
As per RBI’s notification RBI/2011-12/536 dated May 7, 2012, NRIs are eligible to transfer funds from NRO account to NRE account within the overall ceiling of USD one million per financial year subject to payment of tax. This postRBI allows transfer from NRO to NRE account might be helpful.
ICICIbank request letter to transfer from NRO to NRE can be found here (pdf file)
Thanks much for this informative article. I have couple of questions – hope to get some help. I have a NRO Fixed Deposit a/c with ICICI Bank of Rs.300000 and I just received the TDS by mail showing Rs.8921.00 tax deduction for the period 01/01/2012 to 31/03/2012. Also I have submitted a copy of a form to avoid double deduction. I have no other FD or so with other banks – so no other income or source of income in India. At this point what should I do to get the money back or avoid further deduction .
thanks again.
Nesha
The interest on NRO account is fully taxable. Under the Income Tax Act, it is mandatory for the banks to apply TDS on NRO interest. TDS is applicable at 30.9 per cent on the entire NRO interest (without any threshold) and is is applicable on accrual basis on cumulative deposits. The post tax amount can be repatriated subject to a maximum limit of USD 1 million per financial year.Form 15-G (for non-senior citizens) or 15-H (for senior citizens), requesting for non-application of TDS is not available for NRIs.
The TDS is not the same as your tax liability. This liability will be computed on the basis of the income tax rates which again depend upon your income and the exemptions, deductions and rebates you can claim. The TDS can be set off against your actual tax payable and pay only the difference. In case the TDS is higher than the tax liability, you will get a refund.
Ref:moneycontrol:Shanbag
Thanks much for the quick response. I remember submitting a certification signed by a CA for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital in June 2011 and it was accepted by the bank. Can someone explain that to me.
Nesha
Thanks for information Nesha. This is specific case of Fixed Deposit of NRI where one can avail benefit of the lower TDS depending on the overseas country of resident popularly called as Double Taxation Avoidance Agreement (DTAA). DTAA is an agreement entered by India with various countries. NRI customers residing in countries that have signed DTAA with India will be eligible for a DTAA applicable rate of Lower TDS on the interest earned from the Term Deposits booked out of the funds remitted from overseas or from their NRE accounts.
These lower TDS rates (lesser than 30.9%) for the respective countries are decided by Income tax authorities. E.g. for USA, the lower rate is 15%, for UAE it is 12.5% etc.
In order to avail lower TDS, customers need to fulfill the following requirements:
The customer should be a tax Non-Resident as per the Indian Income Tax Act.
The customer should be a resident (tax resident) of the DTAA country and should be entitled to Treaty Benefits as per the criteria defined in the respective DTAA.
The customer should be the beneficial owner of the funds and interest thereon.
If one is desirous of availing the rate of deduction of tax as per the DTAA, the same will be applicable only on your submitting the relevant documents along with your PAN Number usually before beginning of financial year, every year. PAN updation is mandatory to avail of DTAA.
One set of the below documents is required per Customer ID.
DTAA Annexure – Declaration that the client was an NRI during the year in which tax is sort to be deducted & that he does not have any permanent establishment in India.
Original or certified true copies of the ‘Tax Residency Certificate’ (TRC) from the income-tax authorities.TRC are issued by the tax/government authority of the country where the NRI resides. For tax residents of countries where there is no income tax, a “Self-declaration” shall be submitted by the depositor to the Branch.
Self attested copy of passport & visa.
For UAE and KUWAIT ONLY- photocopy of the passport pages which give the details of entry and exit.(to ascertain 183 days stay in a calendar year for UAE and 183 days in a financial year for Kuwait)
If no certificate under DTAA is submitted by the depositor, then Income Tax at a rate of 30.90% will be deducted at source on interest earned in the NRO accounts/deposits irrespective of the amount of interest.
Does this answer your question Nesha?
Nesha the icicibank link for NRO Fixed Deposit lists out all the details.
Now coming to the question you had asked
I have a NRO Fixed Deposit a/c with ICICI Bank of Rs.300000 and I just received the TDS by mail showing Rs.8921.00 tax deduction for the period 01/01/2012 to 31/03/2012. Also I have submitted a copy of a form to avoid double deduction. I have no other FD or so with other banks – so no other income or source of income in India. At this point what should I do to get the money back or avoid further deduction .
thanks again.
If the total income(including interest ) earned by you is below the exemption limit, you can claim refund from the I-T department by filing I-T returns.
To avoid TDS, Being a non-resident, you cannot furnish declaration in Form 15G to the bank. You will have to obtain a certificate for non-deduction of tax at source by making an application in Form 13 with the jurisdictional tax officer. Such a certificate has to be then submitted with the bank.
For more information you can read this link
I have a question regarding the way tax is calculated for the income from other sources, when a part of it is from F.D and tax has already been deducted for it:
Please be a bit patient, as I have made it a long one to explain my point.
An example that shows my current state:
1. I am a salaried person, so my company deducts TDS on my income from salary.
2. I have earned an interest amount of Rs. 72,000 from Savings account and Rs 28,000 from Fixed deposit accounts.
3. Since all the F.Ds are in the same branch and the interest they earn is above Rs. 10,000, the bank has already deducted an amount of Rs. 2,800 towards tax on the interest of Rs 28,000.
4. For this income from other sources, I would be falling within the 30% tax bracket.
5. From what I understood from certain articles on the web, I should pay interest u/s 234 B and 234 C over the tax on this income – obviously after adding the education cess to it – (which I will have to pay all together with the “Self Assessment Tax” that I pay).
I think, I need not pay the interest u/s 234 A (since I am paying within the due date of filing returns for the financial year 2011-2012 – i.e 31st July, 2012)
I think, I have figured out the way to calculate the interest for the tax u/s 234 B and 234 C.
What I don’t understand, is how should I adjust the TDS from the bank i.e Rs 2800 in this whole thing. Should I be paying interest u/s 234 B and C for the F.D interest? If yes, how can the TDS paid be adjusted there?
Thanks a lot for reading this far. I am sure the answer to this would help a lot of people.
Appreciate your efforts.
Thanks Paras for appreciating our efforts and details you provided for the question. There are two parts of the question
1. Advance Tax.
2. Adjusting for TDS
Advance Tax is, as the name implies, is the tax that one pays in advance. Advance tax is the income tax that is payable if your tax liability exceeds Rs 10,000 and should be paid in the same year in which income is received. It is also called as “Pay as you Earn” scheme, since you pay the tax in the same year in which you earn income. You can read about Advance Tax and verify your understanding by reading our article Advance Tax:Details-What, How, Why.
Second part: Adjusting for TDS
Income tax assessment comprises of following stages:
Computation of total income: Income from Salary + Income from House Property + Income from Profits and Gains of Business or Profession + Income from Capital Gains + Income from other Sources
Deducting valid deductions :One can reduce the income if one invests in legal tax deductions such as 80C, 80DD.
Determination of the tax payable thereon : Calculate the total tax you are required to pay. Deduct TDS and see if there is some balance that you need to pay. Ex: Your tax requirements comes out to be 40000(from the salary) + 8400 (from the FD. Note Interest on FD is taxed at 30%). As TDS has been paid fully by your company based on your income slab So 40,000 is accounted for. But Bank has only deducted 2800 (10%) and not 8400. So you need to pay balance: 56 (8400-2800) . As this is less than 10,000 you don’t need to pay Advance Tax. You only need to pay balance tax
Please verify the TDS deducted with Form 26AS
Paying the tax : Pay 5600 in Self Assessment Tax
Filling Income Tax Return Form.
These steps are described in detail in our article Income Tax Overview.
Please let us know if it’s clear or you need more clarification.
Hi
I have a query…I wanted to know that i have various FDs in a bank and my interest income is more than 10,000 yearly.So in that case will the TDS be deducted from my a/c. inspite that i have filled Form H15g declaring that i am a housewife and i do not have any other income other than this.I even don’t have a PAN card which i declared at the time of opening the a/c. PLEASE GUIDE ME….
Rosy the bank would be deducting TDS at the rate of 20% as you have not provided the PAN if TDS is to be deducted.
And 15G Form will be not be applicable.
Whether interest in your FD in a branch of the bank exceeds Rs 10,000 is what you have to look. Note it is limit of 10,000 is on branch of the bank and not all FDs together. That is the reason people split up the FDs in different banks.
Please visit your bank and they would provide you with details. Please let us know too for our readers will benefit.
As a follow up Rosy asked the question by sending an email:
Please ask questions on the blog itself – it would benefit all readers.
Are the FDs clubbed together from all the branches of the same bank????And also that from different banks?????There is a myth that though everything is online nowadays so u cannot maoke FDs in different banks…please guide.
Our response:
Rosy the bank would be deducting TDS at the rate of 20% as you have not provided the PAN if TDS is to be deducted.
And 15G Form will be not be applicable.
Whether interest in your FD in a branch of the bank exceeds Rs 10,000 is what you have to look. Note it is limit of 10,000 is on branch of the bank and not all FDs together. That is the reason people split up the FDs in different banks.
Please visit your bank and they would provide you with details. Please let us know too for our readers will benefit.
Dear Sir/Madam,
I request your advice on the below case:
I am earning Rs. 9,000 from my FD at a bank in a financial year. In the same period I earn interest amount of Rs. 1,800 from my saving A/c and Rs. 1200 from RD account in the same branch.
Will the TDS be deducted by bank on my interest amount in this situation? If yes, how much amount will get deducted provided they have my PAN number.
Thanks,
Abhishek Dixit
Dear Sir,
I request your advice on the below case:
Suppose I am earning Rs. 9,000 from my FD at a bank in a financial year. In the same period I earn interest amount of Rs. 1,800 from my saving A/c and Rs. 1200 from RD account in the same branch.
Will the TDS be deducted by bank on my interest amount in this situation? If yes, how much amount will get deducted provided they have my PAN number.
Thanks,
Abhishek Dixit
Thanks for the question it made dig a little more on the subject. Some clarifications:
1. No TDS is deduced for Saving bank account
2. No TDS is deducted for RD
3. TDS is deducted for Fixed Deposit if interest acrrued or paid exceeds Rs 10,000.
Ref:CAClub:Matter of Interest,
ICICIBank:Recurring Deposit FAQ
For Financial year FY2011-12 or assessment year 2012-13 interest on all the deposit accounts (Saving Bank Account, RD, FD) is taxable as per your income slab.
So bank should not deduct TDS for you. You can check TDS from Form 26AS
Please let us know us about your case, our readers and us would appreciate it.
Hi,
Thanks for your reply. I agree that no TDS will be applicable on saving and RD accounts. Also, interest in my FD is not exceeding Rs. 10,000 so TDS should not be deducted from it.
But, my cumulative interest from all the accounts (FD+Saving+RD)is exceeding 10,000. So will the bank deduct TDS on my FD interest i.e. Rs. 10%of Rs. 9000= Rs. 900? Or they will consider that interest from FD is below 10,000 (ignoring interest earned through saving a/c and RD), so NO Tds will deducted at all?
Please Advise… Many Thanks in Advance!!
Abhishek,
As mentioned earlier Bank does not deduct TDS on RD or Saving Bank account – though interest is taxable at your income slab as it comes under Income from other sources.
As your FD interest is less than 10,000 bank should also NOT deduct TDS for FD.
So for you no TDS should be deducted.
Please check Form 26AS and verify.
We would appreciate if you share your findings(TDS deducted or not) with our readers.
Abhishek TDS will be deducted at the rate of 10% provided they have your PAN number-else 20%
Hi,
I am John, a content writer and a webmaster. Today, I visited your site(http://bemoneyaware.com/) and must say that it is awesome in terms of information provided in the content. I would like to contribute one guest post to your site. I wonder if you permit me to write for you. My article will be written on your site niche. I assure you that the article will be unique and informative for your site.
In return, You can also write one guest post for my financial sites or you can take backlinks from those sites.
Looking forward to your valuable and sincere reply.
Regards,
John Martinez
Financial writer & Webmaster
Sounds interesting. We do not have guest posts but why don’t you mail one across to bemoneyaware@gmail.com and we shall get back to you whether we can use it or not!
Regarding Tax saver fixed deposits,one can choose from cumulative,quarterly interest payout,Half-Yearly/annual interest payout option…One need to choose the option at the time of submitting the fixed deposit request…it can not be changed afterwards.
Unlike NSC,Interest reinvested in cumulative option do not qualify for 80C benefits…so one can choose to take out interest if sole purpose is to save tax.
Thanks for great tips. Thaks a lot!
Thanks for the reply.
But my query remained unanswered. I know that the gift to parents, major son and daughter, brother and sister are not taxed.
My query was not about the gift but about the income that was generated by investing the amount received as a gift, from above mentioned relatives, in FD or any other financial instrument(s). (as pointed by you in your article)
I know in case of spouse, minor children, son’s wife it is clubbed with the income of the donor but what about others. (even the taxguru articles mentions about spouse, minors etc. only and not about others)
Thanks
Sorry Umesh I went off the tangent. Let me make another attempt in answering the question:
As per the current laws, any gift received in cash or kind exceeding Rs 50,000 is taxed in the hands of the recipient as “income from other sources”. However, this rule does not apply to gifts received from relatives. Additionally, any gift received on the occasion of your marriage, under a will or inheritance is not taxed in your hands.
Relatives, for the purpose of taxation, include spouse of the individual, siblings, brothers and sisters of the spouse, brothers and sisters of the parents, and any lineal ascendant or descendant of the individual or the spouse,
Though there is no tax on gifts, all gifts in excess of Rs 50,000 (other than those from relatives) and income generated through them get clubbed with the recipient’s taxable income. However, income earned by assets gifted to minor children, spouse and son’s spouse are included in the income of the donor for taxation.
It is pertinent to note that while there is no tax on gifts under given circumstances, the revenue authorities will be within its powers to treat even such unexplained or unproved gifts as cash credits. It would, therefore, be prudent to maintain documentary evidence (such as a gift deed/letter of understanding) in respect of gifts received, to avoid any dispute with the revenue authorities at a later stage. This is particularly relevant in cases where the gift amount is substantial and also where it is received from relatives.
Hope it explains. I would suggest talk to your CA or tax consultant if the amount is big for at times we are penny wise and pound foolish.
Thanks for the reply but again you discussed more on taxation on gift rather than taxation on income generated from gifts.
Anyway I posted my query to a blog and the answer was, it will be clubbed. I have posted a counter question, will let you know the answer, if it is replied.
But my logic is, nowhere, in any article or review or blog etc., I found that the income generated from gift by relatives is clubbed with donor, except in case of income from gifts to minor child(ren), spouse and son’s wife. And if clubbing of income is a possibility, then why only these specific relations are mentioned everywhere, why not others or to say every relation.
I also contacted a CA and his reply was that income will not be clubbed provided it is by cheque/draft and supported with document like gift deed.
I do not know how much amount is big or substantial whether 10K, 100K or 1000K
Thanks for sharing the info and keep us posted. We are doing research on the topic and will have an article soon.
Another excellent article by you. Your series of articles on Fixed Deposit is marvelous.
I have a query.
In the paragraph Some points to note for Fixed Deposits:
You wrote:
“Investors often book fixed deposits in the name of non-earning family members such as spouse. The rule is ……….. when income tax is calculated, it will have to paid by the donor or earning member.”
You cited the example of spouse. How about if the gift is made to (all non earning family members or earning but total income is less than exemption limit)father, mother and also to brother, sister, son and daughter (not minor)and invested in FD or any other financial instrument(s).
Thanks
Umesh thanks for encouraging words. A very good point raised about taxability of gift. It is a very detailed topic but in nutshell.
Under the Income Tax Act a person has to pay taxes on his income. A person cannot transfer his income or an asset which is his one of source of his income to some other person. If he do so the income shown to be earned by any other person is included in the assessee’s total income and the assessee has to pay tax on it.
TaxGuru article Clubbing of income discusses it in detail.
Yes you are right gift to parents, major son and daughter , brother and sister are not taxed,
As per the provisions of the I-T Act, 1961 (the Act), any sum of money received by an individual or a Hindu undivided family in a particular financial year, without consideration, the aggregate value of which exceeds Rs 50,000 is taxable.
Exemption is:Gifts received from any relative, as defined under the Act, is not taxable. Relatives include spouse of the individual; brother or sister of the individual; brother or sister of the spouse of the individual; brother or sister of either of the parents of the individual; any lineal ascendant or descendant of the individual; any lineal ascendant or descendant of the spouse of the individual; and the spouse of the person referred to as aforesaid.