How Your FD and Savings Account Interest Is Taxed

  Author: Sanjay Sharma

Often, there are people who overlook the income they earn from bank savings accounts and fixed deposits from banks and other financial institutions. The truth is that you need to pay tax for this income and this income needs to be included in your income tax returns. Here are some basic things that you need to keep in mind.

Bank savings account interest The interest that you earn from a bank savings account is tax-exempt till Rs 10,000 per year. The rest of the income from savings account is part of your “other incomes” i.e. one of the five income categorisations for tax purposes. 

Fixed deposit interest In this case, banks deduct tax at source (TDS). You can view this online when you download Form 26AS. The remaining part of the interest income is taxable according to your tax slab. This means you pay higher amount as tax higher your tax slab.