Interest on savings account

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Sachin Kumar

M.Com

53 Points Joined April 2014

Dear All,

I would like to draw you kind attention on the subject of Interest received on savings account.

1. If interest received on 01.04.2014 for on the balance of 31.03.2014, then in which year it will be treated income of the year. Whether it is to be related to F.Y. 2013-14 or F.Y. 2014-15.

2. Under Section 80TTA, there is a duduction upto 10,000/-, So now should we have to show it in our "Income from Other sources"?? As we have to claim for deduction. Is it our income or deduction??

At the time of Income tax return filling, what is to be treated??

Kindly share the process to show & claim of interest received on savings account when it received on or before 01.04.2014.

Replies (2)

Vishal Goel

Chartered Accountant

1693 Points Joined April 2014

Income chargeable under this head shall be computed as per the method of accounting followed by assesses. There are two methods of accounting namely

Cash basis : the income is recognized only on its actual receipt and expenses are recognized only on its actual payment
Mercantile basis: the income is recognized even before its actual receipt and expense is recognized even before its actual payment

CA PAYAL GAJJAR

Personal Practice

150 Points Joined October 2013

1) Income from Interest on saving bank a/c should be included in the head of "income from other sources'' as per accounting method followed as said by Vishal Goel.

2) We hv to first add interest on saving bank account in ''income from other sources" as income chargeable to tax and then from total income calculated deduction is available u/s 80TTA.

But do not forget if u have interest from post office saving account exemption is available u/s 10(15)- in case of individual Rs.3500 and in case of joint accounts Rs.7000.