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Interest on savings bank account and FDs in a bank

09 April 2020

Sir, My Bank has issued a statement of Interest on Savings Bank account and Various FD accounts held by me.There are two columns Interest paid and interest accrued.Which one I have to show while filing return.Is it necessary to club both or Accrued only.thanks

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10 Replies

CA Aditya Lahoti (Chartered Accountant) (380 Points)
Replied 10 April 2020

You have to add both the interest.

rama krishnan (12234 Points)
Replied 10 April 2020

You have to show both interests under income from other sources and you can claim deduction under section 80tta to an extent of 10k or savings bank interest whichever is less if you are less than 60 years of age. if you are more than 60 years of age, then you can claim deduction to an extent of 50k under section 80ttb

Retheesh Kumar (28 Points)
Replied 10 April 2020

U have 2 option regarding in this case.
one is u can take interest income based on the receipt basis ie interest paid only showed in income from other source and another one is interest paid and accrued will be included in your IT return and it helps to avoid the difference in 26AS and your return.
u can follow any one of the above method and such method should be followed consistently in following years also

2 Like

Posiedon (cfo) (23 Points)
Replied 11 April 2020

when the TDS threshhold was 10000 all banks were submitting interest income + TDS in to the 26AS. So filing with what was in 26AS was easy .In this year FY2019-20 , only few banks are reporting in to 26AS. AS a senior citizen, none of the banks have more than 50000 TDS deductable (basically max 5 lakhs FD in any bank) So far only a few banks out of many have reported all sb+ FD interest ( no TDS as 50k threshold is not reached) .26AS is showing interest income only from say 2 out 10 banks
So this year filing is with Interest income certificates received from all banks ( income much more than 26as). Have to report all sb+FD interest income to the last penny as Income tax can check as we are giving all sb a/c details .

CA Naveen Chand (Chartered Accountant) (12729 Points)
Replied 11 April 2020

on the basis of accrual , you have to show in ITR

sabyasachi mukherjee (25988 Points)
Replied 23 April 2020

Income tax act has not mentioned anything about accrual

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 23 April 2020

Mr. Sabyasachi, PLS go and see the relevant sections. Incomes are always taxable at the time of credit or accrual whichever is earlier, in mercantile system of accounting. PLS don't post any comments in respect of which you are not sure. It'll develop a distrust among the members (who are not tax professionals) about the credibility of this forum.

Vaish T (85 Points)
Replied 11 August 2020

This is interesting discussion. Now my question is; Isn't interest accrued in last FY, is actually paid (and credited to account) in the current year? So if TDS is already deducted in the last year for Accrued interest, do we need to pay Tax again for the same interest which was actually paid this year? I may be naive on this subject, so would like to know what experts think about it.

sabyasachi mukherjee (25988 Points)
Replied 12 August 2020

Yes, we always take care of accrued income.
But there may be some cases where interest accrued is considered this year for an ongoing term deposit or fixed deposit.
But next year you should be cautious in not considering it again.

In case of income/receipts it's always conventional to consider it on receipt basis.
Income tax act has not seperately defined income accrued.
Accounting standard has defined seperately Accrued Income.

G.S. Rao (3 Points)
Replied 15 August 2020

I was having two deposits and tenure was 5 years.In 2013 and 2014 my tax consultant suggested that interest may be shown as received on maturity and follow the practice consistently.But I don't remember correct date(2015 I believe), a press note was released and the then Finance Minister Mr. Jaitley has said the Interest accrued also to be shown every year,not at the time of closure.He felt since interest is added to the capital at the begining of FY it is deemed to be paid by the bank to the customer.It is fine but for people who file their returns it is bit confusing.To avoid future problems I am showing both interests(Accrued and Paid) for all deposits since then.What I non finance mind says is because it is accrued, it is paid.How they are different?