Treatment of tax on Fixed deposit interest

[mirza21]

hi

I made a FD of 6 Lakh at 8.50% for 5 years
yearly interest =Rs 51000

As your can see TDS will be deducted approx 10% after that i am left with rs 45900

My yearly income is 4 lakh

Please clarify on this
1) if tds is deducted by bank on by interest income then the remain 45900(interst after tds) is to be added to total income for tax calculation or not. (i.e 445900).

 

[magnet]

since your income falls between 1.6l to 5l range tax on your income will be on 10% range.

First add all income like 4l salary income,51k bank fd interest and any other income to your table.Say the overall total comes 5 lakh exact.

Now say you invested 1lakh amount in 80c bonds(i am not adding infra bonds and insurance amount just for sake to show calculation.they also carry deductions respectively)

So your total income becomes 5 lakh - 1 lakh = 4 lakhs

Tax on this 4 lakh = 10 % of 4 lakh -1.6 lakh(tax free limit) =10% on 2.4 lakh amount = 24 thousand rupees(again i am not adding surcharge i guess its 10.3% but for sake of calcultion taking 10%)

SO your tax liability is 24000 rupees.

Now bank have already deducted 10% tax on your fd to the amount of 6100.

It means already on your behalf bank have paid 6100 out of 24000.So now you have to only pay 17900 as tax.But make sure you get the necessary tds certificate from bank else even though tax paid you might fall into trouble.


Also in another way since you fall under 10% bracket and since already tds is deducted at 10% rate . the whole amount should not be added to your overall income for tax calculation .But if you fall under 20% or 30% bracket than again it needs to be added and respective % should be applied.

Hope this clears your querry.