It tracks the deposits and interest income where TDS has not been deducted, that is, where you have submitted Form 15 G/H. If you want to escape tax, invest the gifted money in a tax-free option, such as the PPF or ELSS scheme. You can later claim exemption for it under various sections.Also Read: Six steps to e-filing your income tax return Also Read: Under which Section have you got an income tax notice? So, if your annual income is Rs 4 lakh and you invest Rs 1.5 under Section 80C, your tax liability will be zero. Though interest earned from fixed deposits, recurring deposits, even tax-saving bank deposits and infrastructure bonds, is fully taxable, people often do not report any interest income below Rs 10,000.

Source: Economic Times July 04, 2016 01:03 UTC