Tax on accrued fd interest

Tax queries 513 views 2 replies

Rajeev

Others

25 Points Posted on 02 June 2016

Hi,

I hold some cumulative interest fixed deposits with SBI. The interest accrued over a period of three years.

I calculated and reported the interest in my tax return every year. However, even though the accrued interest exceeded Rs 10000 each year, SBI did not report the interest to the IT department (so no entries in Form 26AS). No tax was deducted at source.

These fixed deposits matured in FY 2015-2016. SBI has reported the entire accrued interest in this year's Form 26AS and also deducted tax on the entire amount of accrued interest.

How do I inform the IT department that the interest in my Form 26AS is actually for a three-year period, and that I have already reported one third of this interest amount in FY 2014-2015 and another one-third in FY 2013-2014?

Thank You.

Rajeev

Replies (2)

prem kumar

student

36 Points Posted on 02 June 2016

Even in the case of Cumulative interest fixed deposits, Bank has to deduct TDS every year for interest accrued for that particular year, if 15G/H not submitted & interest crossed Rs.10000. We do likewise in our Allahabad Bank. Only incase of some investments like NSC's, there is an option to investor either to declare interest accrued every year or Whole at maturity at their choice. Do confirm!

Rajeev

Others

25 Points Posted on 03 June 2016

Thank you Prem.

I am certain SBI did not report interest or deduct tax. This is their explanation:

"We understand from your email that you wanted to know why Tax is not deducted on Accrued Interest. We have to advise that Bank from time to time take out circular instruction based on RBI directive wherein it is clarified about deduction of Tax on Interest earned by Non Resident would be done only at the time of payment thereof in Cash/ cheque/ draft /any other mode. Hence, Tax on Accrued Interest is not deducted.

When to deduct Tax:-

a. In case of Interest payable to non-residents, deduction of tax shall be made

only at the time of payment thereof in cash/cheque/draft/any other mode."

My question is, how do I indicate in my IT return that two-third of the interest income has already been reported in previous years? My tax liablity will be substantially higher this year if all the interest is treated as income of current year.

Thanks.