Inclusion of Interest Income in the Return of Income filed by Persons liable to Pay Tax

Press Information Bureau

Government of India

Ministry of Finance

23-March-2016 17:29 IST

Inclusion of Interest Income in the Return of Income filed by Persons liable to Pay Tax

Information regarding interest earned by individuals and business entities on term deposit is filed with the Income Tax Department by banks including co-operative banks and other financial institutions and State treasuries etc. Form 26AS reflects only those payments on which tax has been deducted and it can be viewed by the individual tax payer by logging in to www.incometaxindiaefiling.gov.in. The information about interest payments without deduction of tax is also filed by the payer with the Department.

Central Board of Direct Taxes(CBDT) hereby informs the persons earning interest income that interest credited/received on deposits is taxable unless exempt under Section 10 of the Income-tax Act. Such interest income should be shown in the return of income even in cases where Form 15G/15H has been filed if the earning is not exempt under Section 10 of the Income-tax Act and the total income of the person exceeds the maximum amount not chargeable to tax. 

Tax payers are advised to collect correct details of interest received or credited and 

* file their return of income for assessment year 2014-15 (if not filed already) on or before 31.03.2016 in case their total income exceeds the maximum amount not chargeable to tax.

*  revise their return of income for assessment year 2014-15/2015-16 if the return already filed does not include taxable interest income.

*file return of income for assessment year 2015-16, if not filed so far by including taxable interest income if any, on or before 31.03.2016 and avoid penalty u/s 271F.

For more details, you may contact your Assessing Officer or Toll free number 1800-180-1961. 

5 Year Post office Time Deposit eligible for 80C

Investment made in "five year time deposit in an account under Post Office Time Deposit Rules, 1981" will be eligible for deduction from the Gross total income, under section 80C, with the overall section treshold of 1 Lakh.

  

The additional point to be noted is "The amendment shall apply to investments, as above, made during the financial year 2007-08 and subsequent years."

Below is the summary of the Finance bill presented in the budget:

Enlargement of the scope of eligible saving instruments under section 80C

Section 80C of the Income-tax Act provides for a deduction of upto rupees one lakh to an individual or a Hindu undivided family (HUF) for,-

(i) making investments in certain saving instruments; or

(ii) incurring expenditure on tuition fee and repayment of housing loan.

With a view to encourage small savings, it is proposed to enlarge the scope of eligible saving instruments by inserting two new clauses in sub-section (2) of section 80C. 

The following investments made by the assessee, during the previous year, shall be eligible for deduction under section 80C within the overall ceiling of rupees one lakh:-

(i) five year time deposit in an account under Post Office Time Deposit Rules, 1981; and

(ii) deposit in an account under the Senior Citizens Savings Scheme Rules, 2004.

Further, it is also proposed to provide that where any amount is withdrawn by the assessee from such account before the expiry of a period of 5 years from the date of its deposit, the amount so withdrawn shall be deemed to be income of the assessee of the previous year in which the amount is withdrawn. The amount so withdrawn, accordingly, shall be liable to tax in the assessment year relevant to such previous year. The amount liable to tax shall also include that part of the amount withdrawn which represents interest accrued on the deposit. However if any part of the amount so received or withdrawn (including the amount relating to interest) has suffered taxation in any of the earlier years, such amount shall not be taxed again.