Instead of showing lump sum interest, the tax slab will be reduced by showing interest received every year and heavy tax liability can be avoided. The easy way to avoid the action of the tax department is to give full information of interest to the ITR.
Give full information of interest in ITR
Interest on bank fixed deposits (FD) is taxed. People often forget this while filing Income Tax Return (ITR) and do not tell the earnings from FD interest. This small mistake can become a mess of the law because the tax department can send a notice.
In the recent month, many such incidents have come to light in which notices have been issued by the tax department to people who have paid taxes through messages and mail. Such notices are being sent because the details of the interest earned in the tax department do not match the ITR. According to a report by ‘Mint’, due to this mismatched figure, people are getting rigorous notices. The only way to avoid this is to be very careful while filling the ITR and inform the tax department about the pie-pie earnings from interest.
Provide information about FD earnings
To avoid this mess of the tax department, first of all, there should be information about the tax on FD interest. You should also know how to give details in ITR. If you do this work correctly, then you do not need to worry. You will be able to easily avoid the action of the Income Tax Department.
Benefits to senior citizens
Ordinary citizens have to pay tax on the earnings of FD interest. However, senior citizens can claim tax on earnings up to 50 thousand. For senior citizens, this rule applies equally to saving and fixed deposit interest. But senior citizens have to give this information in ITR. In the ITR, under the ‘Income from other sources’ section, you have to tell about the earnings on interest. It has to be filed under Section 80 TTB of Income Tax.
When to provide information in ITR
There are two options available to give the details of earning on interest. You can give the details of interest according to every year which is available on FD or you can give that year also when you get FD return. Experts believe that the first option is more correct in both of them. People should be informed about the interest of every year in ITR.
Instead of showing lump sum interest, the tax slab will be reduced by showing interest received every year and heavy tax liability can be avoided. TDS is also deducted on behalf of the bank for every year interest, which can be shown in Form 26AS in the year of filing ITR. There will be no difference between TDS and annual interest figures and there will be no violation of the rules of the tax department.
On the other hand, if a person gives the details of lump sum interest, then it can come under the ambit of higher income tax. There is a possibility of higher tax cut on showing lump sum interest. Banks deduct TDS at the rate of 10 percent on earning interest in excess of the threshold limit in a year. This limit is fixed at 50 thousand rupees for senior citizens and 40 thousand rupees for ordinary citizens. The year the bank gets more interest than the threshold limit, the year the bank deducts TDS and it is shown in the 26AS form. In such a situation, there is a possibility of difference in the details of 26AS and TDS.
TDS is also effective
If the taxpayer wants to give information about interest in ITR for the year of FD maturity, then they should also tell about TDS. There is a special option for this in the ITR form, in which the TDS has to be told about the year. This form should be filled very carefully because even a small mistake can call the notice. In spite of all this, if your earning is less than the tax limit, then you can fill Form 15G / H and can be free from the hassle of TDS. Here Form 15H is for Senior Citizen, while Form 15G is for General People.
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