tax on intrest
pratyu
(Querist) 04 May 2011
This query is : Resolved
sir
i deposited 8 lakhs as fdrs in IOB bank in my name,i had received the money from usa from my brother.the bank people told me that i will have to submit pan card for tax assesment,they told me that i will have to pay tax on the interest received by me on that money.
please kindly advice me how much interest( amount received as interest on the fdr)can be exempted from tax since i dont have a pan number at pesent and they tell me 20% will be deducted as tax for not producing pan.kindly advice the maximum limit of money a person can get on such savings without being liable to tax.
thank you
R.Ramachandran
(Expert) 04 May 2011
Dear Mr. Pratyu,
You have to understand certain basics. Income of a person can be under many heads, and some such heads are as indicated below:
1. Salary income (which will include pension also).
2. Business income
3. Income from House property (after allowing 30% allowance for maintenance etc., remaining 70% is chargeable to income tax)
4. Interest from SB Account, Fixed Deposit etc.
5. Dividend from Shares (completely exempt)
Now, if the income from the above sources, exceed the exempted limit, then the person has to pay income tax. For the financial year 2011-12, the exempted limit of income is Rs. 1,80,000/- for male individual, Rs. 1,90,000/- for females, Rs. 2,50,000/- for senior citizens who are 60 years and above; and Rs. 5 lakhs for persons of 80 years and above.
First you have to total your salary income, income from rent of property, and interest from SB Account/ Fixed Deposit etc.
From that total you can deduct savings made by you if any (i.e. in GPF/PPF, Insurance, Tax Saving Bonds etc.) maximum permissible limit is Rs. 1 lakh.
If the NET amount, is above the tax exempted amount (i.e. 1.8 lakhs etc., stated above), then on that different you are liable to pay income tax.
One of the methods of recovery of income tax is recovery of tax at source (TDS). This is done by the employer, the banks and other institutions which pay interest on your Fixed Deposits etc. as per law.
You also wanted to know as to what is the maximum limit of money a person can get on such savings without being liable to tax.
It is to be clarified to you, that there is no maximum limit separately for salary, separately for interest on Fixed Deposit etc.. The exemption is based on the total gross income.
The latest law is, one has to furnish PAN Card. If PAN card is furnished, then only 10% will be deducted as TDS from the interest on Fixed Deposits. If PAN Card is not furnished, then they will deduct 20% tax.
Thereafter, it is for you to file the income-tax return and if you are entitled for refund of tax (the amount of TDS) then you have to claim refund by submitting the return.
For submitting the return, you have to have a PAN Card.
Therefore, it will be advisable for you to apply for and get a PAN Card. If you apply now, within maximum of a week you will get your PAN Card.
soumitra basu
(Expert) 05 May 2011
If you do not have any pan number and if your interest income and other income shall be less than maximum amount chargeable to tax in that case you can submit form no.60/61 to the bank. You can also submit 15G form to the bank for deducting TDS.
MUKESH SHARMA
(Expert) 15 May 2011
Expert : soumitra basu is right , if you are not having any other income you can submit 15g
