If the interest income in savings accounts is less than 10 thousand rupees, then you can take advantage of tax exemption by mentioning it in ITR.
New Delhi. The date of filing Income Tax Return (ITR) has been extended to 31st December. If you are also submitting ITR, then information about the tax rules on interest income can benefit you.
Tax expert Virendra Patidar explains that banks deduct TDS on interest income above Rs 40,000 per annum (Rs 50,000 for senior citizens). Even if the interest income is less than this, it is added to the taxable income. This has to be mentioned in the ITR. But interest income up to a certain limit received on the savings account of a bank, co-operative society or post office is tax free. Let’s know about this in detail…
Income is tax free only up to 10 thousand rupees
If you get interest up to Rs 10,000 in a year from your savings bank account, then you are exempted from income tax under section 80TTA of the Income Tax Act, 1961. This benefit is available to individuals below 60 years of age or Hindu Undivided Families (HUFs). If you have savings accounts in more than one bank, then a total income of 10 thousand rupees will be tax free on all these. If the interest on the savings account is more than Rs 10,000 per annum, then you will have to pay income tax on the additional amount. At the same time, in the case of people above 60 years of age, interest up to Rs 50,000 earned in a financial year from a savings account is tax free.
There is no exemption on interest income on FD, recurring deposit and current account
There is no exemption on interest income from FDs, recurring deposits and current accounts. TDS will be deducted on income above Rs 40,000 for both FD and RD. For those above 60 years of age, this limit is 50 thousand rupees. But even if the interest income is less than this, it will have to be reported in the ITR and tax will have to be paid on it according to the prescribed slab.
Get more benefit in the post office
Under section 10(15)(i) of the Income Tax Act, additional tax exemption is available on the savings account in the post office. This exemption is applicable for interest income up to Rs. 3500 per annum in case of a single account holder of Post Office Savings Account and up to Rs. 7000 in case of joint account.
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