Tax rate on interest from savings account

Tax queries 3426 views 6 replies

Seth

148 Points Joined March 2010

Hello,

What is the exact taxing process for interest earned on savings and Fixed deposits?

I have 3 savings bank accounts and none have deducted TDS.

One bank interest income is around 26K, other around 7K and other 600 making it a total interest income of Rs. 33,600.

None of the banks have deducted TDS.

I am in highest 30% tax bracket with salary income more than 10Lakhs and form 16 received from employer.

Is it correct that there is an exemption for first 10,000 so tax should be paid for remaining 23,600? At what rate is tax to be paid for such interest income?

Will really appreciate if some can help on calculation mechanism for how much extra tax should I pay due to this interest income of 33,600 Rs.

Thanks

Replies (6)

Giridhar S Karandikar

Team Lead

7558 Points Joined November 2011

there is no application of TDS provision for interest received on SB account unlike FD. Hence the total interest earned during the F.Y. would get added to your total taxable income & tax would be levied acordingly. Yes you can get exemption upto Rs. 10k only on this interst.

MAHESH GARG

AUDIT EXECUTIVE

334 Points Joined July 2009

I would like to add that Exemption on interest on savings deposit can be availed for Assessment year 2013-14

Neha sharma

1257 Points Joined February 2012

No TDS is deducted on Interest on Savings Account And Interest from FD is deducted separately by each bank..

CA Mukul Mittal

CA in practice

384 Points Joined October 2009

as per the amendmen tin the finanance act, 2012, there will not be any deduction on account of tds in case the assessee is having income from interest of rs. 10000 or less. therefore, no deduction.

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

Agreed with Giridhar Sir. No tax deduction is attracted on interest from savings bank account.

As for the FD intt, TDS provisions prevail.

Seth

148 Points Joined March 2010

Thanks to all for your inputs.

However, I am getting confused by all these responses.

My simple question is - being in 30% tax bracket and having income more than 10 Lakhs, what is the additional tax I should pay on this interest income of 33,600 Rs. ??

What is the correct way to calculate the exact amount of tax.

Will appreciate if you can respond with the answer.

Thanks a lot.