Calculation of income tax on bank interest is not correct Actually bank interest is not fully income; it is only the

adjustment to the decrease of the principal amount due to infection and remaining part(if any) is income. Suppose I deposit Rs10000/- in a bank @9% form 1st April 2012 to 31st march 2013 maturity amount will be about 10930/-. Inflation index of financial year 2012-13 is Inflation index of financial year 2011-12 is 852 785

So the improved cost of Rs. 10000 is 10000*852/785 = 10853.00 So the taxable income is 10930-10853=77 So charging the income tax on 10930-10000= 930 is not correct. The finance minister is also aware of this fact, so he is introducing the inflection indexed bonds. I request to the finance minister that income due to bank interest should be chargeable to income tax after compensating the inflection as above by inflation index as given for capital gain tax. Dr. A.K.Kulshreshtha

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