tax calculation

Whole interest will be added to your taxable income and taxed as per current slab rates.

Lets say, you earn 4 lacs in 2011-12 from interest, then this will be your taxable income. You may get deductions by investing under sections like 80-c, 80-d etc. After that whatever amount is left, income tax rates will apply. Say, 0% income tax on first 1.90 lacs and 10% income tax on next 3.1 lacs. Click here to check income tax slab rates.