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Include interest income on Savings and Bank FDs into your Filing I-T returns

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Last date for filing income-tax return for AY 2012-13 is July 31

INCOME-TAX on any interest income of above Rs 10,000 from savings bank accounts and from fixed deposits have to be disclosed and paid while filing one's annual income-tax return.

The last date for filing returns for the assessment year 2012-13 is July 31 unless the government extends it, as it did last year.

For salaried people, the tax is deducted at source by the employer but income tax on incomes from other sources have to be computed and mentioned while filing the annual tax return.

Individuals must also be mindful of the tax dues on their incomes from other sources, which include any interest income of above Rs 10,000 from their savings bank accounts and from their fixed deposits.

The interest income from all fixed deposits for a person coming under any tax slab is taxable and one has to quote the interest income while filing one's income-tax return.

Not showing fixed deposit interest incomes in the income-tax return is illegal and may attract legal consequences.

As per the Income-tax Act, an individual's income is classified under five heads. Salary is classified under the income from salaries head, while the interest income from savings bank accounts and from fixed deposits are treated as "Income from other sources" in the income-tax return. A 10 per cent tax is charged under the income tax law.

Those who have submitted their permanent account number (PAN) details to their banks, tax is deducted at source at 10 per cent from interest incomes of above Rs 10,000 from savings bank and fixed deposit accounts.

But in case one has not submitted PAN details, for any interest income above the Rs 10,000 limit from savings bank accounts or fixed deposits, the TDS is deducted at 20 per cent per annum.

In the event of failure to pay tax and disclose interest income, there is a lump-sum penalty of Rs 5,000 if it is filed after the end of the assessment year.

On top of this, there is a penalty of 1 per cent per month on the net tax payable under section 234A of the Income Tax Act.

There are two months to go for the July 31 deadline to file returns. If you haven't paid tax on your interest income in FY13 then the sooner you pay your tax the lower will be the penalty amount.

In case a person's personal income is below the taxable limit and his annual interest earned from savings bank accounts is more than Rs 10,000 and the bank has made a TDS claim, the individual has to file a self-declaration in Form 15G stating that his income is below the taxable limit to get a tax refund. The form is available with banks, the local income-tax office and can be downloaded from the website http://www.income taxindia.gov.in.

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