Income from Interest on Bank Deposits included while filing ITR
It has been made mandatory now for the individual taxpayers to include their income earned from interest on bank deposits in their tax returns while Income Tax Return Filing. Taxpayers are now required to file revised income-tax returns for the past two years to reflect their interest income. All the taxpayers must include their income from interest on bank deposits while filing the Income Tax Return.
Interest credited/received on deposits is taxable unless exempt under Section 10 of the Income Tax Act, 1961. Section 10 of the Income Tax Act states the exemption of income from the calculation of total income for tax purposes. Form 15G/15H are self-declaration forms filled by the depositors and handed over to banks to ensure that the tax is not deducted at source by the bank on the interest accrued on a bank deposit.
The Tax Department gets all the information about an individual’s deposits from the financial institutions. The banks and financial institutions are required to file the information regarding interest earned by individuals and business entities with the Income Tax Department. The information about interest payments without deduction of tax also has to be filed by the taxpayer with the tax department.
Related Post: Shadow economy/Black economy
The tax department wants all the taxpayers to disclose their interest income while filing the tax returns. To avoid penalty, the taxpayers should file the tax returns before 31st March each financial year.