As per IT act only banks are exempted from deducting tds if the total interest they pay (FD+SB) is less than Rs.10000 per branch. As far as individual is concerned they are suppose to declare it under the head IFOS and pay tax as per their IT slab. This is a loop hole and people are evading tax by opening fd in various branches and avoiding tds effectively dont pay taxes. Though it is easy to trace it as most of the banks are under CBS, IT department is yet to come out with the revision till all the banks are coming under 100% CBS. The major persons affected by this are government employees as bank FD is the safest investment for them so they have to think.
Tax on interest from saving bank
Page no : 2
Atul Kumar
(CA)
(504 Points)
Replied 21 April 2009
Interest earned on SB A/c is fully taxable under the head Income from Other Sources whether this amount is Re 1 or more than that. So, there is no relevance of Rs. 10,000 or so.
Atul Kumar
(CA)
(504 Points)
Replied 21 April 2009
Also, no interest is earned on Current A/c and hence no question of taxability. Further, Interest on Tax Refund is also taxable in the same way as Interest on SB A/c.
vijay
(.)
(212 Points)
Replied 22 April 2009
Interest recieved from Saving Bank account is taxable under the head income from other sources u/s56
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