I understand that income from regular FDs is taxed as per the person's tax slab and interest income from savings account is tax free till ₹10,000. I have a sweep-in account where the amount is automatically converted to FD when the account balance goes above a certain limit. This FD is liquidated whenever I withdraw the money. How is this sweep-in FD taxed? Is it considered as interest income from savings account or treated as a regular FD and taxed as per income tax slab?
- Abhijit
Sweep-In FD is a time deposit, the interest from which will be treated the same way as interest from another regular FD. It is just that this fixed deposit is created automatically. The interest earned on fixed deposit will be added to your income under the head 'Income from other sources' and taxed as per your slab rate. As it is a term deposit, Section 80TTA is not applicable to Sweep-In FD. Section 80TTA is applicable only to your savings account where interest income upto ₹10,000 earned during a financial year can be claimed as exemption.
This article was originally published on July 03, 2014.
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