ICICI savings account - double charging tax?

Walletwatch

Hi

I know this might be preposterous, but if it's true, they surely need to be taken to task. September was the first month I had a sizeable sum in my ICICI HiSave account, so I took the trouble of calculating the interest I'd earn, and compared it with what was actually credited - to my shock, what was credited to my account (which should've been at their gross rate) was much lower than what I calculated. Got an idea later, and grossed up the amount they had credited by 25%, and sure enough, that figure tallied with what I had calculated. Which means their stupid systems actually already calculate interest at the net rate and again charge 20% of that amount towards tax.

Has somebody else had a similar experience?

isasmurf

Has somebody else had a similar experience?

Apparently so
http://forums.moneysavingexpert.com/showthread.html?t=97254

Walletwatch

Well, just to be doubly sure, I have calculated my interest for last month as well, and sure enough, the same thing has happened last month, although on a lower balance, which is why I wouldn't have noticed it last month!!!

charlieboycat

Walletwatch wrote:

Got an idea later, and grossed up the amount they had credited by 25%, and sure enough, that figure tallied with what I had calculated. Which means their stupid systems actually already calculate interest at the net rate and again charge 20% of that amount towards tax.

I don't know about others, but I'm afraid you've lost me as to what they've done. Sorry if I'm being dim, but could you explain in figures (illustrative if you don't want to give actuals)?

Walletwatch

Well, according to my calculations, my gross interest for the month should be £100 (for e.g.), and the tax that should be deducted should be £20. However, what they have actually ended up crediting me as gross interest is £80, on which they have charged a further 20% (£16), thereby giving me a net interest of £64, instead of the £80 that I should've actually got...

grumbler

Just some more clarification for charlieboycat

Walletwatch wrote:

... thereby giving me a net interest of £64, instead of the £80 that I should've actually got...

Walletwatch wrote:

...and grossed up the amount they had credited by 25%, and sure enough, that figure tallied with what I had calculated.

£80*80%=£64 ... £64*125%=£80

DocProc

Well I have calculated my interest and it seems quite correct.

In the Credit column and dated 30/09/05, I have received 'INTEREST'. This calculates out to an exact 5.27% of the available capital funds for the month. I have checked this out and it is perfectly correct, since 5.4% AER = 5.27% Gross.

In the Debit column there is an entry '20% CHARGE WITHHELD', which is an exact 20% of the INTEREST amount. Perhaps this should say be a bit clearer about the 'what' and 'why' of the charge that has been withheld and say 'Tax deduction' or similar.

Where the entries in the Credit, Debit and Balance columns are in 'whole £s', then they are not to two decimal places.

eg, £10 is shown as '10' rather than '10.00'. I do think this looks rather daft and looks very messy.

Another thing, is that the transaction numbers are wrongly numbered. The most recent is always number '1', the next most recent is number '2', etc. An entry will therefore keep on changing its transaction number as more and more entries are made. Since they keep changing, this makes the numbering of transactions rather pointless, really. I would have thought my first transaction should have been numbered '1', my second '2' and so on. This is not the case though. They are numbered from 'most recent' to 'first' and not from 'first to 'most recent'.

charlieboycat

Walletwatch wrote:

Well, according to my calculations, my gross interest for the month should be £100 (for e.g.), and the tax that should be deducted should be £20. However, what they have actually ended up crediting me as gross interest is £80, on which they have charged a further 20% (£16), thereby giving me a net interest of £64, instead of the £80 that I should've actually got...

Gadzooks ... well, something stronger really but since ladies read this site ....

That is crass - not to say criminal? I wonder what percentage of their accounts they're doing this to (not all, based on DocProc's experience)? And what percentage of their account holders check the calculation each month? I'm glad they've only got £1 of my money.

No doubt you've taken this up with ICICI by now - it will be interesting to know their response (assuming you ever get one).

Walletwatch

Yes, have called the branch and they've promised to get back to me end of day today. Will follow up tom, and keep you posted...

Walletwatch

They just got back to me - false alarm - deposited a chq and they started the interest clock for the chq five days after the date of deposit, so while the figures seem to tally now, it is disappointing that they take five days to recognise credit on a chq and start accruing interest on the amount.

Edited to add:

It was a coincidence that the differential amount for the three extra days came to exactly 25% of the gross interest they credited me, which obviously got me suspicious that they were giving me net interest and terming it as gross...

Decided not to push my luck by asking for interest workings for last month though, anyway the difference was in pennies ;-)

charlieboycat

Walletwatch wrote:

They just got back to me -

Congratulations. You must hold the record for getting both a prompt and a proper response !!