Tax on Interest from Savings and FD

Tax queries 454 views 3 replies

Seth

148 Points Joined March 2010

Hi,

I'm getting different opinions on this, so raising it as a seperate question.

The question is - what is the effective tax rate for interest earned on Savings and FD's?

The bank deducts TDS at 10% on the interest it pays on Savings and FD. However, if a person is in 30% tax bracket, does he need to pay the remaining tax seperately?

One of the CA's mentioned that interest on Savings and FD is taxable only at 10%, irrespective of the individual's tax bracket. While many CA's on this forum mention that it is taxable as per individuals tax bracket, so the balance is payable as advanced tax.

Can someone be kind enough to clarify this rule on interest on Savings and FD?

Thanks,

Replies (3)

Aparnaa

Student

349 Points Joined February 2008

Banks/ Institutions deduct TDS if the interest exceed 10000/5000 as the case may be, at 10%.

The interest income is taxable as Income from other sources for an individual.

So he has to pay tax as per the applicable tax bracket for his total income. TDS deducted by the banks wil be taken into consideration in determining net tax payable.