Is income tax payable on interest income that has accrued but has not been received?
This would happen, for example, in case of a bank fixed deposit that pays cumulative interest. While interest on such deposit will accrue on a periodic basis, the depositor will not receive it till the deposit matures and he withdraws it. Therefore, if the depositor has to pay income tax on accrued interest, he must pay the tax from income other than the accured interest. If the depositor does not have another source of income, or if that source is not sufficient, how will he pay the tax?
Answer:
Yes, Income Tax has to be paid on accrual basis only. U may be earning income from any source - salary, house property, business or profession but interest income is charged under income from other sources. U R method of accounting will be applicable for your business income and professional income if any. But interest income has to be accounted as and when it is accrued as the banker gives credit for the same in their books of accounts and in your passbook every quarter or on monthly basis.
If you are a "cash basis" taxpayer (and most individuals are) you are taxed on income as received, not when it accrues. There is an exception to this general rule. If you, as the recipient, control the timing of a payment then you would be taxable when the income becomes payable (accrues) not when you choose to receive it.
you have to pay the IT on the interest accured . to get the interest for the year pl. ask the bank for the closing balance.
Interest accrued on FDs is taxable on accrual basis
If your total income is less than the maximum non taxable income, then you collect your TDS certificate from the bank and file a IT return to claim the refund of your TDS.
IT deptt will refund you your TDS deducted by the bank via cheque
For more or filling ur IT return contact me at coolapurav@yahoo.co.in
yes. you should consider interest for a year as income for that year. If u don't have other income implies u have interest income from fdr > 2500. As such bank will have to deduct tds, and thus ur tax is paid.
iInterest accrued,but not paid to the depositor,as in the case of cumulative deposits,except on maturity is treated as income during the financial period,when it has accrued.If the assessee does not have income other than the accrued income,the tax liability will be clearted when the deposit is paid on maturity or when the assessee gets other income to clear it earlier.
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so, even when you earn 1100$ per month, you still pay federal (15%) and state taxes (10%) did I get it right?
Answer:
Yes, Income Tax has to be paid on accrual basis only. U may be earning income from any source - salary, house property, business or profession but interest income is charged under income from other sources. U R method of accounting will be applicable for your business income and professional income if any. But interest income has to be accounted as and when it is accrued as the banker gives credit for the same in their books of accounts and in your passbook every quarter or on monthly basis.
If you are a "cash basis" taxpayer (and most individuals are) you are taxed on income as received, not when it accrues. There is an exception to this general rule. If you, as the recipient, control the timing of a payment then you would be taxable when the income becomes payable (accrues) not when you choose to receive it.
you have to pay the IT on the interest accured . to get the interest for the year pl. ask the bank for the closing balance.
Interest accrued on FDs is taxable on accrual basis
If your total income is less than the maximum non taxable income, then you collect your TDS certificate from the bank and file a IT return to claim the refund of your TDS.
IT deptt will refund you your TDS deducted by the bank via cheque
For more or filling ur IT return contact me at coolapurav@yahoo.co.in
yes. you should consider interest for a year as income for that year. If u don't have other income implies u have interest income from fdr > 2500. As such bank will have to deduct tds, and thus ur tax is paid.
iInterest accrued,but not paid to the depositor,as in the case of cumulative deposits,except on maturity is treated as income during the financial period,when it has accrued.If the assessee does not have income other than the accrued income,the tax liability will be clearted when the deposit is paid on maturity or when the assessee gets other income to clear it earlier.
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