Taxation of interest income on accounts and deposits opened with Banks

Starting from 2023, personal income tax (hereinafter referred to as Personal Income Tax (PIT), tax) applies to income in the form of interest on deposits (account balances) if it exceeds the amount of interest calculated as the product of one million rubles and the maximum key rate of the Central Bank of the Russian Federation in effect as of the 1st day of each month in the specified tax period (calendar year).   

Exception: 

- interest paid on escrow accounts and on deposits (account balances) in rubles, for which the interest rate during the calendar year did not exceed 1% per annum; 

- income in the form of interest received in 2021 and 2022 on deposits (account balances) in banks located in the territory of the Russian Federation. 

Interest received by individuals on foreign currency deposits (accounts) is taken into account regardless of the interest rate and is converted into rubles at the official exchange rate of the Bank of Russia on the date this income is actually received.   

When determining the amount of interest for 2023 not subject to taxation, for 2023 the Federal Tax Service will use the maximum key rate of 15%. 

In 2023, income in the form of interest on deposits (accounts) in banks in the amount of 150,000 rubles (1 million rubles × 15%) is not subject to Personal Income Tax (PIT). 

The determination of the tax base and tax calculation in relation to income in the form of interest is carried out by the tax authorities based on data provided by banks, the Central Bank of the Russian Federation, or the state corporation "Deposit Insurance Agency (DIA)".   

Interest income on deposits and accounts is included in the aggregate of tax bases subject to Personal Income Tax (PIT) at the progressive tax rate of 13% / 15% (for example, wages, income from securities transactions, and other income established by Clause 2.1, Article 210 of the Tax Code of the Russian Federation). If the amount of tax bases is less than or equal to 5 million rubles, the Personal Income Tax (PIT) rate will be 13%. A 15% rate will apply to the amount exceeding 5 million rubles. 

The tax must be paid annually no later than December 1 of the year following the reporting year.  For income received for 2023, the tax on income in the form of interest on deposits (accounts) must be paid no later than December 2, 2024. 

Example: 

Income received by an individual in 2023: 

1. Rental income - 100,000 rubles. 

2. Salary —  2,000,000 rubles. 

3. Income on accounts and deposits at a rate above 1% in rubles and income on foreign currency accounts — 250,000 rubles. 

The maximum key rate of the Central Bank of the Russian Federation in effect as of the 1st day of each month in 2023 was 15% per annum 

The amount of income on deposits and accounts not subject to taxation = 1,000,000 rubles * 15% = 150,000 rubles. 

Total income for 2023 = 100,000 + 2,000,000 + (250,000 - 150,000) = 2 200 000 rubles.

Tax on the total amount of income is 2,200,000 * 13% = 286,000 rubles. In this case, 100,000 rubles (250,000 - 150,000) is the part of income on accounts and deposits on which tax in the amount of 13,000 rubles for 2023 must be paid no later than December 2, 2024. 

Tax payment is made on the basis of a tax payment notice sent by the tax authority. Thus, interest on deposits is paid by The bank in full without withholding tax. The amount of income received on accounts is reflected in the taxpayer's personal account. 

The tax notice will be sent to depositors in September–October 2024 for 2023.