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Intrest income on premature closer of fixed deposit

Tax queries 210 views 1 replies

I have made a bank fixed deposit in Feb'15 with my bank for 5 years @ 10% PA. The interest was on Accural basis and the TDS on interest income was deducted by the bank every quater, till june'17.But due to some reason I have to fore close the FD in July'17. The has deducted certain amount from the accured interest saying the rate of interest is revised for lesser period and alos there are fore closer penalty. I have filled my income tax returns indicating the income from interest as per form 16 issued by the bank. which is obviously higher than what i have acctually recieved.

Now my querry is- How can I claim this loss of income due to forecloser in my income tax returns for AY 2017-18

 

Replies (1)
if penalty is small you can simple show them as bank charges.
if not
as tds clearly shown in 26AS, you have to book the whole amount in 26AS as income under the head other sourves and then deduct penalty as expenses incurred to earn interest . Although one can argue that expenses are not directly related to earn interest. So if you have invested the withdrawn amount in any business then claiming the penalty as business finance expense would be more appropriate.


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