According to the Income Tax Act, 1961, any interest earned from a savings account is considered "Income from Other Sources" and must be added to your total taxable income. Coming to your query, is interest on savings account taxable under the current tax laws? So, in simple terms, yes, the interest earned on a savings account in India is taxable. However, there is a provision for tax exemption under Section 80TTA of the Income Tax Act.
Is Interest Earned From Savings Account Taxable?
Yes. For individuals and Hindu Undivided Families (HUFs), interest up to ₹10,000 earned from all savings accounts in a financial year is eligible for tax deduction under Section 80TTA. This exemption applies to interest earned from savings accounts held in banks, post offices, or cooperative societies.
If the interest income exceeds ₹10,000, the excess amount will be added to your total income and taxed according to the applicable income tax slab rates.
For senior citizens, the exemption limit is higher. Under Section 80TTB, senior citizens can claim a deduction of up to ₹50,000 on interest income from savings accounts, fixed deposits, and recurring deposits.
It's important to note that banks do not deduct TDS on savings account interest, unlike fixed deposits. Therefore, you must declare the interest earned while filing their income tax returns and pay the applicable tax.
While the interest on a savings account is taxable in India, the tax burden can be reduced by taking advantage of the exemptions provided under Section 80TTA and 80TTB. I hope you get an idea of is interest earned on a savings account taxable.
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Is Interest on Savings Account Taxable?
snehil
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2024-09-22T09:04:48+00:00 2024-09-22T09:04:49+00:00Comment
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