I got interest of Rs.50,000 from my savings account for 2015-16. How much tax do I have to pay on the interest?
—Sarang Satpati
The interest earned on a savings bank account maintained with a specified bank, cooperative society or post office is taxable in the hands of the individual as ‘income from other sources’. One can claim deduction from total income subject to a maximum cap of Rs.10,000 per financial year (FY) under section 80TTA of the Income-tax Act, 1961. Depending upon the applicable income tax slab rate, you will be taxed on the balance interest amount, which is Rs.40,000. In case your total income exceeds Rs.1 crore during the FY16, surcharge at 12% will be applied on the basic tax rate. Also, education cess of 3% on basic as well as surcharge (if applicable) shall be levied.
Also, it is proposed in the Finance Bill 2016 to increase the surcharge to 15% from 12% on total income exceeding Rs.1 crore.
