Income Tax on FDs

POSTED BY PK ON February 27, 2011 2:58 am COMMENTS (5)

Hi All,

In most of the discussions and the articles, we are talking about the Income Tax on the returns of Investments. But as per my observation, there are many people in India (even many highly educated people) who doesnot even know that the intrest rates on FDs are taxable and should be shown as part of the income. Also there are many people, who dont show them in the income though they knew it has to be shown. Just to avoid TDS they simply give form 15g and avoid tax.  Many people doesnot even know what form 15g is meant for. They just know that tax will not be deducted if the form is submitted. Agreed that PAN no. is mandatory these days. But still people are doing this. This is not something like 5% or 10% people. Its more than 60% people doing this. Also not many show the income on house rent as taxable. Ofcourse there are people who claim HRA by showing bills. But I am really not sure why there is no fixed format for these rent bills where the owner of the house can be tracked to mention the income in his returns.

Seeing these, is it really required to classify the products as taxable and non taxable?

This is only my view. Please throw some light on this.

Thanks.

 

 

 

 

 

5 replies on this article “Income Tax on FDs”

  1. ashal jauhari says:

    Dear Shahid, In case you don’t have resident indian income, It’s advisable to put money in NRO FDs. The interest ‘ll be subject to TDS but you may claim back if your total resident indian income from all sources including this FD interest falls below Zero Tax limit which is 1.6L Rs. for the running FY & 1.8L Rs. for the new FY – 2011-2012.

    Thanks

    Ashal

  2. shahid hasan says:

    Thanks, but i heard that interest rate in NRE AND NRO account is different than tell me in which account i should do FD as i have both account.

  3. ashal jauhari says:

    Dear Shahid, The FDs done under NRE account are tax free but the FDs done under NRO account are liable to tax.

    Thanks

    Ashal

  4. shahid hasan says:

    DEAR PK,
    Is income on FD INTEREST IS TAXABLE IF IT IS AN NRE MONEY , AS I AM AN NRI PLEASE CLARIFY , I WANT TO DO FD.

  5. ashal jauhari says:

    Dear PK, Your observations are correct. Not many people are showing their income correctly. Income Tax deptt. on it’s part, is increasing the use of technology to overcome this problem.

    The people who are not clean in their Tax related dealings, ‘ll be caught & eventually ‘ll pay the price.

    Thanks

    Ashal

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