Income From Other Sources :Saving Bank Account, Fixed

Deposit,RD and ITR

Income from Other sources such as interest of Saving Bank Account, Fixed Deposit,
Recurring Deposit, Senior Citizen Saving Scheme(SCSS) needs to be shown in the
Income Tax return. This article explains Income from Other sources, with picture, what
kind of income comes under this head, whether TDS is deducted or not, how to show it
Income Tax Return with specific cases of common income such as Saving Bank
Account,Fixed Deposit, RD, SCSS, Infrastructure bonds in 80CCF.
What is Income from Other Sources ?
Income earned during the year can be classified into categories like :

Income from Salary

Income from House Property
Income from Business & Profession
Income from Capital Gain
Income from Other Sources :Any income which does not fall under the heads
of Salary, House Property, Business & Profession and Capital Gain will fall under the
head Income from Other Source. Hence, this is the residuary head of income.
This income is NOT exempt i.e it is taxable under the Income Tax Act 1961. Section 56
deals with this residuary head of income and covers all such taxable income. You are
required to enter data of all income earned by you during the year. Our article Exempt
Income and Income Tax Return
What are examples of Income from Other Sources ?
Sub-section 2 to section 56 enumerates various types of income which would be
chargeable to tax under the residuary headSome examples of certain incomes normally
taxed under this head are given below:

Interest on saving bank account, bank deposits (fixed, recurring),

loans or company deposits,
Family pension (received by legal heirs of an employee) : Pension
means a regular monthly amount payable by the employer to a person
belonging to the family of an employee in the event of his death. Family
pension is taxable as income from other sources and a standard
deduction of 1/3rd of pension or Rs 15,000 whichever is less is allowed.

Dividend : Dividend is the payment made by a company to its

shareholders or members out of the profit earned by the company. The
company is liable to pay dividend distribution tax at the rate of 12.5% in
respect of dividend so declared. So, such dividend is exempt from tax in
the hands of the shareholders to avoid the double tax treatment. However
deemed dividend from an Indian company or any dividend from foreign company is
taxable in hand of shareholder under the head Income from Other Sources
Any sum exceeding Rs. 50,000 received without consideration shall be treated
as income provided that the sum of money is not received from any relative or on the
occasion of marriage of the individual or under a will or inheritance etc.
Interest received from IT Dept. on delayed refunds,
Income from royalty,
Insurance commission,
Examiner-ship fees received by a teacher (not from employer),
Income from sub-letting of house property by a tenant,
Agricultural income from agricultural land situated outside India,
Remuneration received by Members of Parliament,
Casual receipts and receipts of non-recurring nature,
Directors commission for standing as guarantor to bankers,
Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games,
Interest on securities,
Income from letting out of machinery, plant or furniture, etc.
When to declare Income from other sources
Income chargeable under this head shall be computed as per the method of accounting
followed by assesses. There are two methods of accounting namely

Cash basis : the income is recognized only on its actual receipt and expenses
are recognized only on its actual payment
Mercantile basis: the income is recognized even before its actual receipt and
expense is recognized even before its actual payment
There are 2 options to declare the interest:

At the time of maturity of the Fixed Deposit or

Every year, on the basis of accrual i.e., interest earned but not yet received
If TDS is deducted on Fixed Deposit then as it will appear in Form 26AS
then you MUST to show it in the same year as tax calculation will be based
on it. Our article Viewing Form 26AS on TRACES explains it in detail.

If TDS is not deducted then you have a leeway and you can show it at maturity. The
disadvantage of showing at maturity is that a higher amount would be deducted at the
end. But as FreeFinCal in Comprehensive Fixed Deposit Calculator I: Total and
Advance Tax Liability insists it If I ever hold a RD or FD I will pay tax each
financial year. You can use the calculator at FreeFinCal to find your tax liability.
If you have a Fixed Deposit or Recurring deposit spanning multiple financial years, say
you invested in Jul 2010 for 3 or 5 years and no TDS has been deducted and you have
not shown interest in Income Tax return till now, then wait till maturity to show it in
Income Tax Return and pay the tax. Yes you will have to pay a bigger chunk at the end
but it would avoid the confusion.
Interest on Saving Bank Account
Saving Bank interest , however small the amount is , is your income. No tax is
deducted(TDS) on Interest of Saving Bank account. From FY 2012-13 (AY 2013-14) year
section 80TTA has been introduced for which deduction up to an extent of Rs 10,00 in
interest from all the bank accounts is allowed to an individual or Hindu undivided
family, Interest over Rs 10,000 will be taxed at marginal tax rate of an individual.
Section 80TTA is shown in Deductions under Chapter VI-A along with 80C, 80D.
Our article Interest on Saving Bank Account : Tax, 80TTA discusses it in detail.
You need to add interest from saving account to Income from other sources
and then claim deduction under section 80TTA. If your total interest income
from ALL your saving bank accounts

is less than or equal to Rs 10,000 For example if your interest from ALL
saving bank accounts is Rs 7,000 you need to show 7000 in income from other
sources and then show Rs 7000 for section 80TTA
is more than Rs 10,000 say 15,000 then add 15,000 to Income from other
sources and then show Rs 10,000 in Section 80TTA

80TTA in ITR

Interest on Fixed Deposit

Interest on Fixed Deposit is taxable as Income from other sources on entire amount
whether TDS is deducted or not. Our article Fixed Deposits and Tax discusses it in detail
TDS : Tax deducted at source

Interest income < Rs 10,000 : No TDS would be deducted

Form 15G or Form 15H submitted : No TDS would be deducted
Interest income > Rs 10,000 and PAN submitted: If you have submitted PAN
details, any interest beyond Rs 10,000 interest income, the TDS would be deducted
@ 10% p.a. For example if interest is 20,000 , TDS deducted will be Rs 2,000(10% of
20,000)
Interest income > Rs 10,000 and PAN not submitted : If you have not
submitted PAN details, any interest beyond the limit, the TDS would be deducted @
20% p.a.
When TDS is deducted you will be issued Form 16A to show the total
interest and TDS. It would also be reflected in Form 26AS.
To show Fixed Deposit Interest in Income Tax Return
Add the entire interest to income from others sources, if TDS is deducted show it in
TDS2 schedule as shown in picture below for Mr S Khan who had TDS deducted.

Filling TDS from Form 16A in ITR

Recurring Deposits, Post office Monthly Income Scheme, Term Deposits
In case of Recurring Deposits, Post office term deposits no TDS is deducted but the
entire interest earned is taken as Income from Other Sources and is taxed. Our
article Overview of Recurring Deposits covers Recurring Deposits in detail.
If you have opened a Recurring Deposit or any of investment schemes in financial year
for which you are filling return for example you opened in Oct 2012 ,then show it in the
Income Tax Return by adding only interest earned as income from other sources. And
keep on showing it.
If you had opened a Recurring Deposit or any of investment schemes for which TDS was
not deducted in earlier financial years, say Aug 2010 but has not reported any of the
interest income till now then wait till the scheme attains maturity, show it in income tax
return of that year.

Senior Citizen Scheme

If the interest income in a year is more than Rs 10,000, then the TDS (tax deducted at
source) is cut. So it is treated in the same way as Fixed Deposit.
Income from Infrastructure Bonds
In the FY 2010-11, FY 2011-12 additional income tax benefit of 20,000 was made
available under section 80CCF of the Income Tax Act, 1961 for investments made in
long-term infrastructure bonds (as notified by the Central Government). This deduction
limit of 20,000 will be over and above 1,00,000 benefit available under section 80C,
80CCC and 80CCD. This move was intended to provide a fillip to the infrastructure
finance and provide an opportunity to individual tax payers to reduce their tax
liability. The interest received on these bonds shall be treated as income from any other
source and shall form part of the total income of the assessee in that financial year in
which they are received. If you had invested in infrastructure bonds then you can check
whether interest was paid to you by checking Onemint Interest Payment Dates of
Infrastructure Bonds Issued in 2011-12
References : Wirc-ICAIs Income from other sources
Related Articles:

Fixed Deposits and Tax

Exempt Income and Income Tax Return
How to Calculate Income Tax
Viewing Form 26AS on TRACES
Irrespective of whether income is taxable or exempt from tax, you should disclose it in
your return. This article explains Income from Other sources, what it is how, how to
show it Income Tax Return. In case of cumulative deposit scheme which span multiple
financial year, Fixed Deposits, Recurring Deposits etc is is recommended that you show
interest income earned every financial year