SBI economists have said that those who keep their money in banks are getting negative returns on it. This means that these retail depositors are not making profits from bank deposits, but are incurring losses. According to economists, the tax on interest income on bank deposits should be reviewed to get rid of this problem for investors.
We are telling you when and how much tax you have to pay on income from savings account, FD, RD and PPF.
Under Section 80TTA of the Income Tax Act, income up to Rs 10,000 per annum from interest is tax-free in the case of savings account of a bank/co-operative society/post office. Its benefit is available to a person below 60 years of age or HUF (Joint Hindu Family). At the same time, for senior citizens, this exemption is 50 thousand rupees. TDS is deducted if the income exceeds this.
An additional deduction of up to Rs 3,500 can be claimed under section 10(15) on interest income earned from post office savings account annually. This additional deduction is available in addition to the limit of Rs 10,000/50 thousand.
Fixed Deposit (FD)
If the interest received on bank FD in a financial year is less than 40 thousand rupees, then no tax will have to be paid on it. This limit is for people below 60 years of age. At the same time, income up to 50 thousand rupees from FD of senior citizens above 60 years of age is tax free. 10% TDS is deducted on income above this.
Recurring Deposit (RD)
If the interest income from Recurring Deposit (RD) is up to Rs 40 thousand (Rs 50 thousand in case of senior citizens), then you do not have to pay any tax on it. 10% TDS is deducted on income above this.
The investment made in this comes under the category of Exempt-Exempt-Exempt (EEE). That is, along with the investment made in the scheme, no tax will have to be paid on the interest and maturity amount received in it.
If you do not have a PAN, then more tax is levied
10% TDS is deducted by the bank if the interest income is more than the prescribed exemption limit, but if you have not given PAN then the TDS rate becomes 20%.