Tax on interest earned on savings account

POSTED BY shashank ON June 20, 2012 3:31 pm COMMENTS (6)

How much tax is deducted from interest earned from money in savings bank account ??

6 replies on this article “Tax on interest earned on savings account”

  1. shashank says:

    Thanks Ashal for clarifying my doubt

  2. Anand says:

    It is not deducted. You need to add it in your income tax returns under the title ‘Income from other sources’ and pay tax on it.

    Add that in your total income and pay additional tax.

    1. shashank says:

      Hi Anand

      I have form 26AS for 4 consecutive years and under “Tax deducted at source” section TDS is deducted by my employer as well from my BANK as well (I’m having salary a/c in SBI).

      So my guess is it is already deducted by bank itself .

      So while filing returns do I need to put TDS by my employer and bank as well ??

      1. Dear Shashank, let me answer your query. If the SB account interest is more than 10000 Rs. in a FY, the same is liable for TDS. The TDS rules are same. 10% for PAN furnished account & 20% for non PAN cases.
        Now for your case, as the TDS deducted by you is available in your form 26As, it means your TDS rate is 10% & there is a pending tax liability on you as per your slab rate. For example if you are in 20% tax slab, the pending tax ‘ll be 10.6% + penal interest.

        Please put in the details of the interest credit to you in the income from other sources & fill the details of TDS from bank in the TDS sheet – TDS other than employer.

        Before filing your online return, make sure that your tax liability is zero by paying remaining due tax.

        Thanks

        Ashal

        1. shashank says:

          Hi Ashal

          Can you please elaborate more on how bank arrive this figure of 10.6% + penal interest.

          My doubt is how come bank knows under which tax slab I will fall into which it will utilize to arrive at this figure of 10.6 %

          regards
          shashank

          1. Dear Shashank, Bank has already done it’s part by deducting 10% TDS. Now onus lies on you to pay remaining tax as per your slab rate. Please download the online ITR exl. sheet from the following site.

            https://www.incometaxindiaefiling.gov.in

            If you have income from salary, home loan & income from other sources only, the applicable form is ITR-1. For capital gains cases, the form is ITR-2.

            Please put all the details in necessary places & then check for your tax liability. Pay this due tax & punch in the paid tax details in the ITR form. Now generate the XML sheet & upload the same to the above site.

            In case it seems more technical to you, you may take help of any professional.

            Thanks

            Ashal

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