Taxation of maturity of FD.

interest is taxable if same is not include earlier in income on accrual bases.principle is not taxable.

agree with rachit jain

Principal Amount:- No tax will be levied on the principal portion.

Interest:- Interest will be taxable.

PRINCIPLE AMOUNT-NOT TAXABLE.

INTEREST AMOUNT - TAXABLE ON RECEIPT OR ACCRUAL BASIS ON THE BASIS OF ACCOUNTING FOLLOWED.

Answer by Uday Kiran is comparatively complete.

In respect of "Income from Other Sources" - if assessee consistently follows Receipt basis, Interest received on matured FD will be taxable in the year when it is actually received. and

if assessee follows Accrual basis, he has to show Interest accrued proportionately in his ITR. In respect of ITR of the year in which FD matured, [ INTEREST RECEIVED ON MATURITY (-) INTEREST SHOWN IN P/Y. RETURNS ] - will be taxable.

It is beneficial for an assessee to show such income on accrual basis, to avoid bulk income in any one particular year. In such case, assessee would not get complete benefit of 80C or any other deductions. If he follows accrual basis, he MAY get out of tax liability.

Sec 145 relates to method of accounting followed by assessee for taxability of income. This can be applied for Heads "PGBP" and "Income from other sources". as Interest on FD comes under IOS you can show the interest on Accrual basis/receipt basis (ie on maturity) but the method followed should be consistent. Principal amount is not subjected to tax.

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agree with yogesh shah

if u every year claim interest as other income then u don't pay tax on maturity

if u don't claim then u have to pay yax

bank generally gives Form 16A for the TDS on accured interest. so pratically we have to take it per year accural so as to claim TDS in our return. As per 'income from other sources', refer to the previous answers by other prestigious members.

bye

bank generally gives Form 16A for the TDS on accured interest. so pratically we have to take it per year accural so as to claim TDS in our return. As per 'income from other sources', refer to the previous answers by other prestigious members.

bye

Dear Experts,

I have below queries regarding the Tax for FDs interest.   Kindly clarify. 

1) If I have a FD in the bank and if it is started from previous financial and getting matured in next finanancial year then how the tax will come for current year.  For example, if I have the FD started from Feb 2011 & getting matured in Apr 2012 then I will get the interest only in Apr-2012 & in the financial year Apr 2011 to Mar 2012, I would not have got the interest.  Do I need to pay tax for the interest for the financial year Apr 2011 to Mar 2012?

2) As Bank deducts the TDS automatically every year for the interest gained, can we get those details from 26AS form (from Income Tax site) and pay 2 times of that amount as a Self Calculated Tax.  Because bank pays 10% of the interest as TDS & if we fall in 30% slab in our tax payment, balance 20% (Two times of TDS paid by Bank) needs to be paid.  Is this the correct method to calculate and pay tax for the FDs interest (based on the TDS details obtained from 26AS form.

3) In few occassions, bank pays TDS in multiple days even though FDs are getting mattured on one particular day.  That amount does not seem to be exactly matching with the interest gained.

Hello All,

Regarding Tax planning I have one questions which my one friend asked me.

5 Yrs FD is tax free or will considered under 80C so question is what if somebody make FD on 30 Mar of 1 lac & then will withdraw/break in say 31 Dec & again do FD in 30 Mar.

Is it possible ?

Regards,

Nashikar