Cancellation of personal income tax with interest on bank deposits of more than 1 million rubles for 2021-2022

The Government of the Russian Federation at a meeting held yesterday proposed to temporarily cancel the collection of personal income tax from interest on bank deposits of more than 1 million rubles for 2021-2022.

Prime Minister Mikhail Mishustin stressed: "The abolition of such a norm not only for the payment of interest for the past, but also for the current year, will help support citizens, help save savings, which is especially important in the current situation."

Recall that depositors had to pay tax for the first time in 2022 for the income of 2021. As a general rule, personal income tax is levied on the difference between the amount of interest received by the depositor during the calendar year and the amount of interest calculated as the product of 1 million rubles and the key rate of the Central Bank of the Russian Federation on the first day of the calendar year (clause 1 of Article 214.2 of the Tax Code of the Russian Federation). The tax-free income on deposits for 2021 was 42,500 rubles (1 million x 4.25%), since the Central Bank's key rate on January 1, 2021 was 4.25%. Thus, for 2021 depositors will have to pay tax on the interest received above the amount of 42,500 rubles, if this norm is not temporarily canceled.

By the way, on January 1, 2022, the Central Bank rate was 8.5%. At the moment, banks are raising deposit rates, which will allow depositors to get a greater return on interest received. Even the temporary abolition of the norm on the payment of personal income tax with interest on bank deposits will in fact prove to be an effective measure to save citizens' funds.