How you reporting all your interest income?CS GAURAV +919990694230

If you have not been reporting the interest income from your fixed deposits while fil ing tax returns, there is reason to worry.All interest income from bank FDs (including the 5-year tax saving FD), bank recurring deposits, company FDs, non-convertible debentures (NCD) and National Savings Certificate (NSC), among others, is taxable. Even when your bank cuts TDS at 10% on your FD, you are liable to pay the balance tax if you fall under a higher income slab. However, there is flexibility on how you report this income.You are allowed to report interest income either on cash or accrual basis--you can account for the income either when you receive it or when interest is due. For instance, in the cash method, if you have invested in a three-year bank FD where the interest payout is cumulative, you can safely put off reporting the interest income for the first two years. If the interest payout is non-cumulative, you have to report the income that year itself. Under the accrual or mercantile method, the tax on the interest income has to be paid even if the income has not been received. Even when the interest payout is cumulative, the investor has to report the income for each year.Which method should you follow?
By allowing you to defer tax liability until later, the cash method takes away the immediate burden for those facing cash flow problems. However, there are issues. On products like bank FDs where the bank cuts TDS on interest received, if it is in excess of `10,000 every year, the tax credit for the same will be available only in the year in which the income is offered to tax. “Since the issuer would have already deducted the tax in earlier years, you would have to reconcile the same in the final year,