Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Debt Products

Under the Income-tax Act provisions applicable to resident individuals, interest received on a bank fixed deposit is taxed as which of the following?

Interest on a bank fixed deposit is taxed under Income from Other Sources and is added to the individual's total income, so it is taxed at the applicable slab rate. It is not capital gains or house property income, and it is not fully exempt.

  1. AIncome from house property
  2. BIncome from other sources, at the slab rate applicable to the individualCorrect
  3. CCapital gains, at a flat rate of 12.5%
  4. DExempt income up to the full amount of interest

Explanation

Interest on bank deposits is chargeable under the head Income from Other Sources and is added to total income, being taxed at the individual's applicable slab rate. It is not capital gains, since no capital asset is transferred. It is not fully exempt either.

Did you get it right without looking?

One question tells you little. A timed set on Taxation of Debt Products shows your real accuracy, how long you take and where you lose marks.

Practise Taxation of Debt ProductsFree diagnostic mock

More Taxation of Debt Products questions