1. Heads of income
The Department of Income Tax clears revenue in five revenue heads for the purpose of reporting income tax:
- Income from salary
- Income from house ownership
- Income from capital gains/losses
- Income from business and profession
- Income from other sources
- Revenues from other sources include income that does not fall into any of the other income earners.
2. A savings account – Interest income
- The interest that will accrue on your savings bank account must be disclosed in your income tax return from other sources. Please note that the bank does not deduct TDS from the interest on the savings house.
- The interest on the fixed deposit and the repeated deposits is taxed, while the interest on the savings accounts and the postal deposits are to a certain extent tax deductible. But they are shown under income from other sources.
- Interest income from a savings bank or a fixed deposit or from a post office account is shown under this chapter.
3. Deduction on interest income under Section 80 TTA
For a residential individual (aged 60 or less) or HUF, the interest earned up to 10,000 rubles in a financial year is tax-free. Refusal is permitted on interest income earned by:
- bank savings account
- savings account with a cooperative company that performs banking
- savings account with mail
4. Fixed deposit tax
The interest rate on a fixed deposit you receive is added along with other earnings that you have as a salary or professional income and you will have to pay a tax on that income at the tax rate that applies to you. TDS is deducted from interest income when earned, although it can not be paid.
5. Avoidance of TDS on fixed deposits
- Banks are obliged to deduct the tax when interest income from deposits held at all branches of the bank being compiled is more than 10,000 rubles in one year.
- 10% of TDS is deducted if details of PAN are available. That’s 20% if the bank does not have your PAN data.
- Details of the TDS deductible for fixed-interest deposit are in the form 26AS.
- If your total income is below the taxable limit, you can avoid tax deducting of fixed deposits by submitting Form 15G and Form 15H to the bank requesting them not to refuse all TDS.
- Form 15G is for everyone else.
- These forms are valid only for one year. Therefore, they must be submitted every year to keep the banks from a tax deduction.
6. Notification of immovable deposit and periodic deposits in your tax return
Registration of fixed deposits
If you have three open FDs, then add all interest income and enter it under ‘Other interest income’.
7. Free income
The amount of PPF and EPF to be deducted at maturity is tax-free and must be declared as income-free income from other sources.
Keep in mind that: EPF is the only tax-exempt after a five-year continuous service.
8. Family pension
If you collect a pension in the name of someone who is deceased, then you must show this income under income from other sources. There is a deduction of Rs 15,000 or one-third of the survivor’s pension received whichever is lower than the income of the family pension fund. This will be added to the taxpayer’s income and the tax must be paid at a tax rate that is applicable.
9. Taxation of lottery winnings, games, puzzles
If you get money from winning a lottery, an online / TV game shows etc., it will be taxed under your head Income from other sources. The income will be taxed at a flat rate of 30%, which after the addition of the tag will amount to 30.9%