Fixed deposit interest income

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Vishnu Rajendran

3 Points Joined February 2018

Suppose I invested in a bank FD, lets say Rs 10 lakh on 01/08/2020 for 1 year.

Interest paid is compounded..i.e reinvested.

Suppose i received an interest of Rs 40000 on 31/03/2021 & Rs 20000 on 01/04/2021

and TDS is not deposited by the bank.

Below are my queries

1. If I file income tax return for FY 2020-2021. I need to show Rs 40000 as interest income on FD ?

2. On maturity date, i,e 01/08/2021. deposit is matured and money gets credited in savings account.
Here i'm having doubt whether the bank will deduct tds for entire interest (Rs 60000) thinking that i have not paid tax for FY 2020-2021 ? If so what can i do ?

3. Incase if interest income is not shown for return filing what is the penalty ?

4. Which is better? Paying tax on maturity or paying tax for respective FY's ?

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210766 Points Joined July 2016

Follow the 26AS statement. Usually, bank deduct tax every quarterly, unless you have submitted For 15G/H.

CMA Poornima Madhava

CMA

13117 Points Joined May 2009

If the interest income is up to ₹40k, TDS would not apply and hence the same might not reflect in 26AS. Further, banks deduct tax at source on accrual basis.

In your case, I think ₹40k can be disclosed as income for FY 20-21 and ₹20k during fy21-22.

Alternatively, you may disclose 60k during fy21-22 (on receipt basis), as it would be difficult to keep track of transactions if income is offered to tax on accrual basis.

J S BHAVSAR

CONSULTING

1320 Points Joined April 2008

Simply report the interest as it appears on Form 26AS for a particular Financial Year. Report the TDS deducted by the bank as deductor. Tax utility will take care of the computation of total tax as per tax slabs and it will consider the TDS deducted.