Include Interest Income while filing ITR
What is Interest Income?
Net interest income is the difference between revenue and the expenses associated with paying out its liabilities. A typical bank’s assets consist of all forms of personnel, mortgages, and security. Liabilities are the customer deposits. The excess revenue that is generated from the interest paid out on deposits and interest earned on assets is the net interest income.
Declare your Interest Income in your returns – ITR
The ITR has warned all the taxpayers to include their income from interest while filing ITR in India and payers who escape to do so need to re-file their returns for the FY-2013-14.
You’ll have to declare even those interest incomes where Form 15 G/H have been filed and the total exceeds the maximum amount not chargeable to tax, that is, Rs. 2.5 lakh. Only interest income up to Rs. 10,000 exempted under Section 10 may be left out. The deadline for this is 31st March 2016. If missed, there is Rs. 5,000 penalty under avoid penalty Section 271 F of the I-T Act.
Form 15G/Form 15H are self-declaration forms filled by depositors and handed over to banks to ensure that tax is not deducted at source by the bank on the interest accrued on a bank deposit.
While Form 26AS reflects only those payments on which tax has been deducted, the department can track your other deposits and interest payments received without deduction of tax through information received from banks and other financial institutions.
Related Post: How is Tax computed on Rental Income?
In a survey conducted by economic times last August, 30% of the 2,168 respondents believed that interest of up to Rs. 10,000 from bank FDs is tax free in a year. However, as per the rules, the exemption under Section 80TTA is only for the interest on the savings bank accounts.
What one earns from on fixed deposits and recurring deposits is fully taxable.