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Interest on RD

Asst Manager Accounts


Can anyone pls guide me if interest on RD with post office Or bank is exempt from tax. If not whether TDS is deducted from it & what is the limit for deduction of TDS? Does interest on RD is added to taxable income of individual & whether same is allowed as deduction from Taxable income?

Regards

Prashant

 
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interest on RD is income taxable under the head other sources.

 

if the interest credited exceeds 10,000 during the financial year, then TDS would be deducted..

 

you can claim chapter vi-a deductions like 80C etc... also u can set off any current year loss from house property, business, profession and other sources.

(ignore Business and profession losses claimed by employee for determining the amount of TDS to be deducted)

 
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manager finance


ya its fully taxable

 
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Accounts Manager - Taxation

Interest from FD is fully taxable

 
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Prashant,

Interest on RD  with PO/Bank is taxable income.TDS will be there if the payment is more than Rs10000 from one source i.e this limit is seen Bank wise and not assessee wise.One cannot claim deduction of this interst amount from taxable income but yes you can set off your losses against this income.

 
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 Hi Prashant,



1) The interest from RD is not exempt. It is taxable under the hear 'Income from other sources'.



2)The TDS will be deducted by the Bank if applicable. It is applicable only when the assessee gets interest of Rs. 10,000 or more p.a.



3)It is not allowable as deduction from Gross Total Income.

 
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income from RD and Savings account is subject to income tax. However, TDS is not applicable to the Bank or Post Office on the interest paid into these two types of account. Therefore, your bank deducts TDS only on the Fixed Deposits or Reinvestment Deposits and the interest paid on SB and RD account is exempt only from TDS if you check your pass books even though these accounts are maintained in the same branch where your FDs suffer from TDS. Ditto with Post Office. Your MIS is exempt from TDS although Tax will be deducted from other accounts where TDS is applicable.

 

In short, these incomes are exempt from TDS but not exempt from Tax.

 
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Dear All my Professional colleague

Interest payable by bank of Financial institution on time deposit (i.e. FD) is liable for TDS deduction,

where as interest payable on RD (i.e. deposit other than time deposit) is not liable for TDS deduction.

Kindly refer provision of Sec. 194A(3)(vii) of the income tax act.

Sec. 194A.   Interest other than “Interest on securities”.

(3) The provisions of sub-section (1) shall not apply—

[(vii)   to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

 
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glidor@gmail.com


RD is to be treated as time deposit, as the rates of time deposit apply on the RD, 

also RD has a fixed tenure to get maturity, so its subject to TDS

 
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I.T.Practitioner(Tax Cunsultant)

 

interest on RD is income taxable under the head other sources.

 

if the interest credited exceeds 10,000 during the financial year, then TDS would be deducted..

 

you can claim chapter vi-a deductions like 80C etc... also u can set off any current year loss from house property, business, profession and other sources.

(ignore Business and profession losses claimed by employee for determining the amount of TDS to be deducted)

 
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