Query On Net Interest Calculation On FD and Loan Against FD For ITR

HI SIR 

MY QUERY = I DID FD WORTH 1L AT 7% PA & DUE TO SOME NEEDS I TOOK LOAN FROM SAME FD OF 50K 

AT 8% PA NOW =

7000/- EARNED FOR 1L 

4000/- CHARGED AS BY BANK FOR 50K 

NET = 3000/- I EARNED 

QUERY = NOW IN INCOME TAX WHETER ONLY FOR 3000/- I NEED TO PAY ITR OR FOR WHOLE 7K I NEED PAY ITR 

PLZ ANSWER THANKS & REGARDS 

 

Replies (2)
Quick Summary
This discussion clarifies how to declare interest income on a Fixed Deposit (FD) when a loan has been taken against it. For Income Tax Return (ITR) purposes, the entire interest earned on the FD is considered taxable income. The interest paid on the loan taken against the FD is not deductible, meaning you must pay tax on the full amount of interest earned, not just the net amount after deducting loan interest.

Declare interest income as 7 K...            

For income tax purposes, the entire ₹7,000 interest earned on your fixed deposit is taxable under the head "Income from Other Sources."

The ₹4,000 interest paid on the loan taken against your FD is not deductible while computing taxable income because personal loan interest is not an allowable deduction under the Income Tax Act unless the loan is used for a specific taxable purpose (such as business or investment in income-generating assets).

So, you need to pay tax on the full ₹7,000, not just the net ₹3,000.

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