The last date to file Income Tax Return (ITR) for the financial year 2020-21 is 30 September 2021.
New Delhi. The last date to file Income Tax Return (ITR) for the financial year 2020-21 is 30 September 2021. It is important to give correct information about your income while filing ITR. In such a situation, if you have got a savings account, fixed deposit (FD) and recurring deposit (RD), then there is great news for you. Actually, the interest received on the money deposited in these investment options comes under the purview of income tax because the interest from these savings schemes is considered as income from other sources.
Let us know how the tax on interest income is calculated…
Post Office Savings Account
Under section 80TTA of Income Tax Act, interest income up to Rs.10,000 per annum is tax free in 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 (Hindu Undivided Family). Individuals holding Post Office Savings (Post office schemes) accounts get slightly more tax benefits.
Under section 10(15) of the Income Tax Act, a single account holder can claim an additional deduction of up to Rs 3500 on interest income earned annually from a post office savings account. On the other hand, if the account is in a joint, then additional deduction of up to Rs 7000 can be claimed. This additional deduction is over and above the limit of Rs 10000/50000.
Cancel TDS on interest earned from FD
to FD that is captured TDS on interest earned from bank FD, which cut bank. But if the annual interest income from bank FD is within the limit of Rs 40000, then there is a provision of exemption from TDS. This limit is for people below 60 years of age. It is to be noted here that TDS is not deducted on interest income from post office FD. In case of senior citizens, interest up to Rs 50,000 earned in a financial year from savings account, FD/TD, post office schemes, any deposit made in co-operative banks is tax free.
How the exemption limit is determined The rate of TDS deducted by the bank remains 10 percent if the interest income exceeds the exemption limit fixed by FD / RD. But if PAN is not given, then the TDS rate becomes 20 percent. TDS is also deducted on interest income from Recurring Deposit (RD). TDS is not applicable if there is interest income from RD also up to Rs 40000 (Rs 50000 in case of senior citizens) in a year. This rule has come into effect from April 2019. But if the interest income exceeds this limit, TDS will be
Submit Form 15H
The interest income limit of Rs 10000 in case of Savings Account is the annual interest income of the individual from each savings account. That is, if the person has more than one savings account and they are present in different financial institutions like banks, post offices, co-operative banks, then the limit of Rs 10000 will be counted by adding the total interest coming from all those accounts. The interest income amount in excess of this limit will be added to the taxable income of the individual and then it will be taxed according to the tax slab in which the taxpayer falls.
For the bank not to deduct TDS, senior citizens have to submit Form 15H to the bank. On the other hand, those who are not senior citizens, they have to submit Form 15G. These forms are for declaration that the annual income of the individual does not exceed the prescribed minimum exempt income in a financial year. These forms have to be submitted every year at the beginning of the financial year so that the tax is not deducted.