Tax on interest from savings bank account?

Question

I have earned interest in F.Y.07-08 from the deposits in my savings bank account. Usually it happens quarterly or half-yearly. I have pay tax on that interest income before filling my returns. I fall into 30% tax bracket. I have couple of questions about this.

1) What is the formula for calculation of tax on such interest?

2) Is tax on such interests supposed to be paid quarterly? Will there be any additional penalty, if I pay it now.

Thanks in advance

Answer 1

1. No specific formule; this interest is added to your taxable income and slabs are recomputed. Since you are in the 30% already, not much impact will be seen unless this interest is big. If interest is >5000 a year, advance tax is necessary.

2. No penalty. This can be paid one time and can be paid as Self Assessment Tax.

Answer 2

the interest is included in your income, as credited by bank to your account. the tax will be at the rate applicable to your slab. the tax on total income (including interest) is payable as self assessment tax before filing return. if the tax payable is Rs. 5000/ or more, u have to pay advance tax.

Answer 3

Depending on the type of deposit, you may have to pay tax on the interest earned. It is better you can check this out at the bank where you have deposited your money. In general the interest earned is calculated as income for the year and it will taxed.

Answer 4

The assessee must make payment of advance tax if the tax payable by the assessee for the year is Rs.5,000/- or more.

In case amount is less than rs.5000/-,  you are supposed to pay self assessment tax by 31.03.2008.

If you have not done so you have to pay interest at rate 1% per month.

Your interest rate is Rs.23/- per month.

Answer 5

The interest earned on saving account with any Bank is taxabale i.e. will be added in your income.  

Apparently from your question you have to pay tax on Rs. 2308/- @ 30@ plus edu. cess etc. etc.

No bank is paying interest qtrly. on saving accounts so your question automatically off.

However, the interest earned on saving account with Post Office is tax free.

Answer 6

For income tax rates for FY 2007-08, read

http://mytaxes.in/index.php?topic=16.0

If tax due is more than Rs. 5,000 you must pay advance tax. Read under interest on Deferment of Advance Tax:

http://mytaxes.in/index.php?topic=77.0