1. Bank Of India Interest Rate On Saving Account
  2. State Bank Of India Saving Account Interest Rate
  3. Bank Of India Saving Account Interest Rate
  4. Banks Savings Accounts Interest Rates
  5. Bank Of India Saving Account Interest Rate

In India there are different heads of income; viz., income from Salary, House property, Capital gain, Business & Profession and Income from other sources. Today we are here to discuss only a small part i.e. Interest Income of one of the head of income i.e. “Income from other sources”. You’ll learn about Taxation on Interest income including the important tax deductions available thereon.

Income from Other Sources: Meaning

Income from other sources is a head of income which includes the entire income amount which doesn’t fall in any of the other income heads. This may include but not limited to income like gift amount, interest income, lottery, awards, etc.

It starts earning interest on your money as soon as it is deposited. The interest rate is decided solely by the bank and changes from time to time. Regular interest depends upon the balance of the savings account. Interest rate in savings account ranges from 3.5% to 7%. @Concession of 0.10% in the applicable rate of interest for Home Loan and Vehicle Loan upto -@Terms and conditions applicable. We're here to help you when you need financial support Bank of India launches COVID Personal Loan & COVID Pensioner Loan (conditions apply). Please contact your nearest branch. Rethink banking with a savings account that combines banking convenience and global reach. Savings accounts at attractive interest rates for all your banking needs with a wide range of benefits such as free ATM access worldwide & a host of no-cost banking services. Open a savings account online now at Citibank India.

Interest Income: Meaning

Interest income is an income which an individual earns from:

  • Bank deposits,
  • Deposits in other financial institution and
  • Organizations like post office, trust, etc.

Taxation of Interest Income in India

Interest income in the hands of an individual is taxed under normal slab rates. Thus, assuming an individual has no other income then the first Rs.250,000 would be tax free. After that, the amount shall be taxed at the rate of 5% or 20% or 30% depending on the income tax slab rate respectively.

Before going into benefits and tax deduction for the said income; we need to check and understand different types of interest income. Let me walk you through the details of the same.

Types of Interest Income

So, have a look at the different types of interest income that you can earn from different sources in India.

1. Saving Deposit Interest Income:

Saving Deposit Interest is the income earned on any saving deposit scheme as defined under The Banking Regulation Act. In simplest words, it is the interest that you earn on the balance in your savings bank account.

2. Fixed Deposit Interest Income:

FD Interest is the income earned on any fixed deposit scheme. Simply stating, it is the interest earned on deposits which are made for a fixed period of time as defined under The Banking Regulation Act.

3. Recurring Deposit Interest Income:

RD interest is the income earned on any recurring deposit scheme. RD scheme is the deposit wherein a person agrees to deposit fixed amount at regular intervals for a fixed period of time, as defined under The Banking Regulation Act.

4. Post Office Deposit Interest Income:

In India there are a number of Post Office Saving Schemes for individuals to invest. So, you also earn income on these Post Office Deposit Schemes as defined under Post Office regulation.

Section 80TTA: Income Tax Deduction on Interest Income

Under Income Tax Act, Section 80TTA lays down the tax deduction rule for interest income.

As per Section 80TTA, an individual can claim a deduction of interest income up to Rs.10,000 if the interest income is earned through saving deposit scheme alone.

Section 80TTB: Tax Deduction on Interest Income for Senior Citizens

Bank Of India Saving Account Interest Rate

Bank Of India Interest Rate On Saving Account

Also, in the Budget 2019 there was a new section introduced for Senior citizens i.e. Section 80TTB. Under Section 80TTB an individual who is 60 years or more can claim extra tax deduction of up to Rs.50,000 on interest income earned. The interest income may be from saving account or fixed deposit or post office deposit scheme.

However, if you as a senior person claim deduction under Section 80TTB you can’t claim Section 80TTA deduction.

No doubt, the Government offers additional tax benefits to senior citizens on interest and other incomes as well. And, that’s really good for our senior members.

State Bank Of India Saving Account Interest Rate

Thus, only saving deposit interest income (senior citizens exception applies) has the benefit of tax exemption. Whereas other interest income like fixed and recurring deposit are subject to tax under section 194A at the rate of 10%.

Bank Of India Saving Account Interest Rate

You may also like: TDS on Commission or Brokerage U/s 194H

Taxation of Interest Income: The Bottom Line

Interest

This was all about interest income and how it is taxed in India. If you have any other important points to add here, do let us know in the comments.

Bank Of India Saving Account Interest Rate

On a general basis, interest incomes are subject to tax under Section 194A at the rate of 10% at the time of payment. Banks deduct tax on fixed deposit income i.e. TDS on Interest only after a specified limit of Rs.10000 normally and Rs.50000 limit for senior citizens.

Moreover, it is an individual’s responsibility to add the interest income (savings+FD+other) to their total income while filing Income tax return.

Following two situations may be arise:

  • You need to deduct appropriate tax which might be over 10% (already deducted) or
  • You may have to claim refund in case excess was deducted earlier as TDS.

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Few people try to skip the interest income to avoid taxes thereon, this is not correct. Whatever way, you must include the interest income under the head “Income from Other Sources” in your ITR. Then, calculate the tax payable or refund as applicable.

Feel free to discuss for any queries on interest income and its taxation in India. You may also put your feedback or share views on any financial topic on our active discussion forum.

Documents

Banks Savings Accounts Interest Rates

  • Passport-size photograph
  • Aadhaar card
  • Passport
  • Voter’s Identity Card (Election Card)

Bank Of India Saving Account Interest Rate

  • Passport-size photograph
  • Aadhaar card
  • Passport
  • Voter’s Identity Card (Election Card)
  • Permanent and valid driving license with photograph.
  • Job Card issued by NREGA duly signed by an officer of the State Government.
  • If you have a PAN card, it is mandatory to provide it when opening your account.
  • Note that your PAN card proves who you are (identity) but does not carry your address. With your PAN card, you can book deposits greater than Rs 50000, buy and sell mutual funds and shares, and do a lot more. Your PAN assures us that your transactions are income-tax compliant.