Dear Friends

I am working with an Indian bank and as part of my renumeration the bank offers me a personal loan of 5 Lac at 2% interest rate. The bank includes the prospective benefit as my earning to increase the CTC. Assuming 12% as prevailing personal loan rate, the difference (12% - 2% = 10%) is added to my salary package and taxed accordingly.

Now my question is , if I invest this money in bank FD, am I liable to pay income tax on the interest earned?

Ideally, my earning capability of 10% has already been taxed by my employer bank as aprt of my salary package. Do I still need to pay tax when I actually realize that capability by keeping the funds in a bank FD.

This looks like an INDIAN tax question; this forum deals EXCLUSIVELY with U.S. tax issues.

From a U.S. tax perspective, the interest earned IS taxable income.