Interest income refers to the earnings received from lending money or investing in financial instruments such as savings accounts, fixed deposits, recurring deposits, bonds, debentures, or loans provided to others. Under the Income Tax Act, 1961, interest income is fully taxable under the head “Income from Other Sources,” unless specifically exempted, such as interest on certain government savings schemes. Proper record-keeping of bank statements, interest certificates, and transaction receipts is essential for accurate reporting and compliance. Tax on interest income may be subject to TDS (Tax Deducted at Source) in certain cases, which can be claimed as credit while filing the income tax return. Reporting all interest income ensures transparency, avoids penalties, and prevents legal complications from tax authorities. Professional guidance is recommended for reconciling multiple sources of interest, applying exemptions or deductions, and filing accurate tax returns. Timely and correct reporting of interest income enhances financial compliance, provides a clear picture of taxable income, and safeguards against notices or penalties from the Income Tax Department.