Do I need to pay income tax on the interest i earned on fixed deposit and how is it calculated?

Question

I have heard if interest is more than Rs. 10000, I have to pay income tax on it but if it is less than 10000, I don't need to pay income tax. IF i plan my deposit in such a way that I split my investment into multiple FDs so that none of my deposit give me more than Rs. 10000 as interest. Will this save my income tax or not?

Answer 1

Paying income tax is different from TDS deducted from your interest by the bank.

If for 2008-09, your total income is going to be less than Rs. 1,50,000, then get form 15H/15G from your bank and fill it and give to bank. They will not deduct TDS.

Read http://mytaxes.in/index.php?topic=39.0

Answer 2

As per regulatory framework, every individual needs to pay taxes from the interest earned on fixed deposits. This is because, this interest is termed as 'Income from other Source' and hence comes under the tax slab. However, the income from the interest earned through Post Office Savings Deposit scheme is not taxable income.  For more information log on to- http://www.paisawaisa.com/

Answer 3

Yes. Simply add interest in yout Total income. Intt. less than 10000/ is not tax free. Add all income from all sources.

Answer 4

1. Yes you need to pay income tax on the interest you earned on fixed deposits.

2. Bank interest is treated as "Income from Other Sources" and added to your total annual income.

3. If interest on FDs is more than Rs.10000, then bank will deduct tax at source.

4. Even if you split your deposits, there wont be TDS but you will have to pay income tax due on that income as self assessment tax if your income during the previous year exceeded the maximum amount which is not chargeable to income-tax,

Answer 5

As per latest Finance Bill, all interest income on bank deposits including that on savings and FD is taxable as per your tax slab, even one rupee. Its being advertised by the tax authorities on media also. Only the interest on Post Office Savings Bank deposit is tax free, and also that in the name of children upto a limit of Rs. 1500 per child per annum (bank or post office).

Answer 6

It is some how a nice idea to save tax.but you have to make FD on different names specially not on the name of dependents of yours. and  do not use your childrens or spuse's name because they all are dependents upon you.if you are planning to make Fd on the multiple of 10,000 even if you change branch or bank with the presense of your PAN no in your account you are easily tracable by Income Tax softwares.

Answer 7

All interest income is reportable on your income tax return.  You should receive a 1099 at the end of the year (one copy goes to IRS and to one copy to state income tax authorities).  If the amount is very small you may not receive a 1099, but it is still reportable.