i have 2 ques ,firstly 26 AS form & certificate from bank does not tally ,26 AS shows more,how to correct it?secondly if we deposit in RD is the principal amount also taxable ,this has happened with me, IT has sent notice ?

Ans: From FY 2021-22, if employee’s contribution to an EPF account is more than Rs 2.5 lakh in a year; interest on contribution above 2.5 lakh is taxable in the hands of the employee.

If person receive superannuation on retirement, 1/3rd of the commuted amount and amount transferred to an annuity will also not be taxable. If any the amount is withdrawn, it is taxable in the hands of the employee.

Ans: The income tax in India is paid on accrual or receipt basis whichever is earlier. In case of 1 and 2 you rightly pointed out that since they are received you will pay taxes. As far as FD is concerned, the interest is taxed on accrual basis every year on which TDS is deducted. Hence, every year you will need to show the respective interest in your income tax returns and at maturity only differential interest will be paid.

For eg. FD of INR 100 @10% is made for 3 years then year 1 on 10 rs you will be pay tax. In year 2 you will be tax on 11 rs and year 3 you will tax on 12 rs and upon maturity there will be no taxes since entire interest is paid in the respective years.

Hope I am able to articulate this properly.