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I have a savings bank account in India. I have earned some lakhs this year through some freelance work. I would like to keep that money in the bank itself.

Do I need to manually do anything for income tax?

What will happen if I leave the money in bank? Will the bank deduct the Income Tax automatically from my savings account?

What will happen if I have or have not linked the PAN card?

Thanks in advance.

  • How will the bank know how much income tax to deduct and send to the Government on your behalf? And if the account is not linked to a PAN Card, how will the Government know which person's tax has been sent by the bank? – Dilip Sarwate Jan 10 '15 at 22:07
  • @DilipSarwate I also have those doubt. does the bank block our account until paying the tax? – Amarnath Thangaraj Jan 11 '15 at 7:56
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There are quite a few things you would need to do;

  1. Estimate how much you are earned, find out the tax liability and pay the tax in advance to Income Tax. You can do it online as well, go to the Income Tax website

  2. The interest you earn is also taxable and Bank would deduct a nominal amount, ensure that you have PAN registered with the Bank Account. You need to add this to your overall income and pay tax.

  3. You would also need to file returns every year.

  • Dheer what will happen if i don't pay the TAX? – Amarnath Thangaraj Jan 11 '15 at 7:58
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    @Amarnath: This site does not encourage question where you are circumventing law. If you don't pay taxes, you will end up paying interest and penalty at 1%. If its established as willful default, there is compounding penalty, where by the tax due will become more than original principal amount. – Dheer Jan 11 '15 at 9:12
  • Dheer, thanks for your guidance. i will initiate the necessary things. – Amarnath Thangaraj Jan 11 '15 at 9:53

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