New Delhi: ITR Filing 2024 last date is July 31, 2024. People investing in FDs must know that interest earned on fixed deposits is taxable. However, interest earned up to a certain limit is tax-free. You can lower your total taxable liability by claiming deductions on the interest earned from deposits in savings accounts, fixed deposits and recurring deposits. Under Section 80TTA of Income Tax Act, interest received from savings account up to Rs 10,000 in a financial year is tax-free. Income tax will be applicable interest earned is more than this limit. The threshold is higher for senior citizens under various sections. Let’s see how interest earned is taxed and which ITR to file for interest earned from FD, RD and Savings account.
How savings account interest is taxed?
Under Section 80TTA of Income Tax Act, interest received from savings accounts up to Rs 10,000 in a financial year is tax-free.
This limit of deduction is inclusive of the amount of interest received from all savings accounts.
This deduction is available for people below 60 years of age.
If the interest on savings accounts is more than Rs 10,000, then the amount will be included in the individual’s income and tax rate will be applicable as per his/her Income Tax Slab.
How much FD interest is tax-free under Section 80C?
Taxpayers get the benefit of deduction under Section 80C on 5 year FD.
If the interest on FD exceeds a certain limit, banks deduct TDS at the rate of 10 per cent.
However, the tax liability does not end here.
The income earned from FD is added to your annual income on which tax has to be paid as per the income slab.
This limit is Rs 50 thousand for senior citizens. For people below 60 years of age, it is Rs 40,000.
How much interest from FD is tax-free for senior citizens?
There is a special section 80TTB in the Income Tax Act for senior citizens i.e. people aged 60 years and above.
Under this section, Rs 50,000 is deducted on the interest received on the amount deposited in senior citizen savings, FD and recurring deposit i.e. RD account.
Senior Citizens can claim a deduction of up to Rs. 50,000 from interest in a financial year.
Interest above this will be taxed as per the Income slab.
If your total income including interest is less than the basic exemption limit, then fill out Form-15G/15H and submit it to the bank to avoid TDS from being deducted.
Which ITR to file for FD, RD and savings account interest?
Interest earned on your savings bank account must be declared in your tax return under the category of income from other sources. This includes interest from savings accounts, fixed deposits, or post office savings accounts. Alongside income from salary, one house property, family pension, agricultural income (up to ₹5000), and other sources like interest from savings accounts and deposits (from banks, post offices, or cooperative societies), should be disclosed in ITR 1.
However, if you have income from capital gains and earned interest on fixed deposits, you are required to file income tax return 2 to report these capital gains.
ITR Filing 2024: As per the Income Tax Act, interest received from savings account up to Rs 10,000 in a financial year is tax-free. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
