taxation of fd

This query is : Resolved

shital (Querist)
Follow

12 December 2009 I want to know why on the maturity of fd & principal amt received is not taxable only interest is taxable

CA Balram Sharma

CA Balram Sharma (Expert)
Follow

12 December 2009 Principal amount is your capital,
only interest is income,

Income tax is levied on income,
so only interest is taxable

C.A.Amitabh Gupta

C.A.Amitabh Gupta (Expert)
Follow

12 December 2009 Agree with Balram .
The FD Prinicipal amount is invested out of capital generated through income already charged to Tax. Whereas the Interest is new income generated hence taxable.

CA Amitabh Gupta
Indore
ag_ind@rediffmail.com

Upgrade to CAclubindia Pro. Subscribe Now!

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
Follow

12 December 2009 agree to all experts,
Even your Monthly Saving Principle Amounts are Calculating in your Investment...in B/S but Interest is gain of your investment so it will be taxable..in income from other sources