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Deduction on SB interest income

Anand Desai (CA, CPA) (70 Points)

04 December 2009

Hello everybody,

A client had an interest income from savings account. Bank had charged some charges on the same account. My question is whether such bank charges are deductible from the interest income while arriving at income tax liability?

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12 Replies

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 04 December 2009

No the bank charges cannot be deduted from bank interest.

1 Like

FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 04 December 2009

Bank charges will not be deduted from bank interest.

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)
Replied 04 December 2009

Bank Charges will not b Deducted from Bank Interest

Sunali (Learner) (1317 Points)
Replied 06 December 2009

Originally posted by :AYUSH AGRAWAL
"	Bank Charges will not b Deducted from Bank Interest	"

Agree, the same will be debited to Capital A/c considering personal expenses.

Ansari (ca final) (444 Points)
Replied 06 December 2009

Originally posted by :FATEMA
"	Bank charges will not be deduted from bank interest.	"

VIPUL (ARTICLE ASSITANT) (68 Points)
Replied 26 December 2009

No you cannot deduct bank charges.

Bhavesh (Practising CA) (282 Points)
Replied 26 December 2009

Depends on the nature of bank charges.

If they were for business purposes, then may be allowable in business income.

Nilay Shah (Chartered Accountants) (74 Points)
Replied 26 December 2009

It it is a for purpose of Business u can claim the same.

bibhuti singh (articles assistant) (36 Points)
Replied 17 January 2012

Instructions

- 1
  
  Open a separate business account in order to deduct 100 percent of your business bank, checking and credit card costs and fees. This includes check printing costs, service fees and penalties for that account.
- 2
  
  Keep track throughout the year of any business purchases you made using a personal bank account or credit card. This makes it easier to deduct the business-related portion of those bank charges, credit card fees and interest.
- 3
  
  Pro-rate fees and interest charged on the personal credit cards or bank accounts that you also use for business expenses. When you use a card for personal as well as business expenses, you can only claim tax deductions for the business-related portion of fees, interest or other bank card charges.
- 4
  
  List as deductible any bounced checks from customers. You can deduct the entire amount of the check and any fees or penalties related to the check. However, if you write a check that bounces, you can't deduct the amount of the check, but you can deduct bank charges and any penalties the bank charges you for your own bounced business checks.
- 5
  
  Take deductions for any losses your business suffers due to bankruptcy of a customer or supplier.
- 6
  
  Deduct all the costs and expenses in case of your own business bankruptcy, including costs of filing and additional expenses such as attorney fees.

AK (AK) (37 Points)
Replied 17 January 2012

In case of a salaried employee, if he has only one residential flat which is let out, can the loss on that let out property be incorporated in Form16 being issued by the employer? Say for example,

- Total annual salary of the employee is Rs. 10 lakhs

- He has one flat which he has purchased by taking loan and paying interest to the bank to the tune of Rs.5 lakhs every year.

- His loss from let out house property is Rs.3 lakhs after adjusting for rent.

Q1. Is it allowed to incorporate this loss of Rs.3 lakhs in form 16 to be issued by the employer?

Q2. If it is not allowed to report it under form 16, then does it need to be incorporated in the return and TDS to be claimed?

Kindly guide....thanks

Siddharth Desai (IT Professional) (31 Points)
Replied 28 June 2014

Originally posted by : Bhavesh
	Depends on the nature of bank charges. If they were for business purposes, then may be allowable in business income.

reviving an old thread.

i'm filling out my tax return on taxsmile (i'm salaried employee, no business) and it is asking me if I have incurred any expenses on interested earned on any tax exempt account. if i enter an amount, it is deducting that from the total interest earned. it looks like this deduction is allowed but am not finding anything on the internet to support this, hence am unsure of proceeding. i've got a number of maintenance charges and 1-2 cheque return charges. please advise.

thanks

Siddharth

PREM kasi (Internal audit) (69 Points)
Replied 28 June 2014

bank charges cannot be deducted since they are not incurred for earning such intrest income....they may be incurred for some other reasons...so i think no deduction is available.