Interest Income

Interest Income – Interest income refers to the earnings generated from lending money or depositing funds in financial instruments, such as savings accounts, fixed deposits, bonds, or other interest-bearing assets. This income is considered taxable under the Income Tax Act and must be reported by the taxpayer in their Income Tax Return (ITR). Assessment Year (AY) Context: The income earned from interest during a Financial Year (FY) is assessed and taxed in the corresponding Assessment Year (AY).

Example: Interest earned on a fixed deposit of ₹1,00,000 at 6% per annum during FY 2022–23 (₹6,000) will be included in the taxpayer’s total income and assessed in AY 2023–24.