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Income tax applicability on Bank interest earned in saving

A K Jain (Service) (160 Points)

04 July 2011

I got same reply from employees of three major Banks that interest earned through saving & RD A/Cs are non taxable.After asking in writing,following replies are recd. from Account Manager of one Private Bank

1) Please note that Tax Deduction at Source (TDS) is exempted for Recurring Deposit (RD) and Savings Accounts. Hence, interest earned for savings account and RD account is not taxable.

2) Please note that as informed to you in earlier mail, interest earned through savings account and Recurring Deposit (RD) account is exempted for tax.

I know that interest earned through Bank deposit is taxable.Pl comment.

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21 Replies

A G Vishal Kirthic (Chartered Accoutant) (236 Points)
Replied 04 July 2011

Dear Sir,

Interest received from Banking company is always taxable. Bank is liable to deduct TDS from the payee incase total interest credited to the assessee's a/c exceeds Rs. 10,000 in a particular FY. That too the said provision applies only for Interest received on Time deposit. But this has nothing to do with the taxability of Interest in the hands of the assessee.

1 Like

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 04 July 2011

Originally posted by : Vishal Kirthic
	Dear Sir, Interest received from Banking company is always taxable. Bank is liable to deduct TDS from the payee incase total interest credited to the assessee's a/c exceeds Rs. 10,000 in a particular FY. That too the said provision applies only for Interest received on Time deposit. But this has nothing to do with the taxability of Interest in the hands of the assessee.

AGREED & SUCH INT IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES.

2 Like

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 04 July 2011

Originally posted by : Vishal Kirthic
	Dear Sir, Interest received from Banking company is always taxable. Bank is liable to deduct TDS from the payee incase total interest credited to the assessee's a/c exceeds Rs. 10,000 in a particular FY. That too the said provision applies only for Interest received on Time deposit. But this has nothing to do with the taxability of Interest in the hands of the assessee.

agreed

1 Like

praveen (Chartered Accountant) (6971 Points)
Replied 04 July 2011

There is exemption only from tax deduction at source and not on payment of taxes.

1 Like

valji (Accounts manager-MBA) (2150 Points)
Replied 04 July 2011

agree with vishal

1 Like

CA Nikhilesh Singla (CA) (83 Points)
Replied 04 July 2011

It ll b taxable under head other sources..

A K Jain (Service) (160 Points)
Replied 04 July 2011

Thanks to all of u but are they intentionally misguiding to customer or not knowing about rule ? One Bank employee in front of me even asked to their Helpdesk & confirm that it is non taxable.For a common man ,it is really difficult to understand all rules but after assessment he may be required to pay penalty. Even I have seen that tax payers are filing Form no. 15G on advice of Banks.I have one communication in writing from senior person of govt. bank advicing me to file the same .

shaishav soni (CA final) (348 Points)
Replied 04 July 2011

Agreed with these views.

1 Like

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 04 July 2011

You can also refer this discussion

/forum/details.asp?mod_id=150481&offset=2

1 Like

Paras (Mcom,CA Final) (122 Points)
Replied 04 July 2011

Please dont ignore one thing here , bank have tax saving fd which have minimum period of saving 5 years . such fd is having deduction u/s 80C.

1 Like

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 July 2011

Originally posted by : A K Jain
	Thanks to all of u but are they intentionally misguiding to customer or not knowing about rule ? One Bank employee in front of me even asked to their Helpdesk & confirm that it is non taxable.For a common man ,it is really difficult to understand all rules but after assessment he may be required to pay penalty. Even I have seen that tax payers are filing Form no. 15G on advice of Banks.I have one communication in writing from senior person of govt. bank advicing me to file the same .

AS you have asked the "bank employee" regarding applicability of "tax on interest" so they have replied the correct "treatment of interest for tax by banks".

to know about YOUR TAXABILITY you have to approach a ca or PRO of incometax, not the bank.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 05 July 2011

Originally posted by : praveen
	There is exemption only from tax deduction at source and not on payment of taxes.

MUKESH SHARMA (B.Com , MBA, CS*) (108 Points)
Replied 05 July 2011

Every type onf Interest from Bank taxable & TDS deduct by Bank Except TDS Case on RD A/c

Vikas (CA) (1135 Points)
Replied 05 July 2011

Originally posted by : Vishal Kirthic
	Dear Sir, Interest received from Banking company is always taxable. Bank is liable to deduct TDS from the payee incase total interest credited to the assessee's a/c exceeds Rs. 10,000 in a particular FY. That too the said provision applies only for Interest received on Time deposit. But this has nothing to do with the taxability of Interest in the hands of the assessee.

agree