194A TDS on Interest
This query is : Resolved
28 January 2021
Please share your views " Whether TDS is required to be deducted u/s 194A on savings Interest?"If not please specify the provision.
28 January 2021
TDS not applicable on savings bank interest.
29 January 2021
TDS not applicable on Banking Interest
06 July 2024
As per Section 194A of the Income Tax Act, TDS (Tax Deducted at Source) is applicable on interest other than interest on securities. Savings account interest, typically earned from banks or post offices, falls under this category. Here’s a clarification regarding TDS applicability on savings interest:
### TDS Applicability on Savings Interest:
1. **Threshold Limit:**
- TDS on interest income from savings accounts is not applicable if the total interest income during the financial year does not exceed Rs. 40,000 for individuals (Rs. 50,000 for senior citizens).
2. **Form 15G/15H:**
- Individuals can submit Form 15G (for those below 60 years) or Form 15H (for senior citizens) to the bank to avoid TDS if their total income is below the taxable limit.
3. **Bank’s Responsibility:**
- Banks are required to deduct TDS at the rate of 10% on interest income exceeding Rs. 40,000 (Rs. 50,000 for senior citizens) if the customer has not provided Form 15G/15H and if the total income exceeds the taxable limit.
### Provision:
- **Section 194A of the Income Tax Act, 1961:**
- This section mandates TDS on interest other than interest on securities, including interest on savings accounts, fixed deposits, recurring deposits, etc.
### Conclusion:
TDS is applicable on savings interest under Section 194A if the interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) per annum. However, individuals can avoid TDS by submitting Form 15G/15H if their total income is below the taxable limit. This provision ensures compliance with tax regulations while providing exemptions for small interest incomes.
### TDS Applicability on Savings Interest:
1. **Threshold Limit:**
- TDS on interest income from savings accounts is not applicable if the total interest income during the financial year does not exceed Rs. 40,000 for individuals (Rs. 50,000 for senior citizens).
2. **Form 15G/15H:**
- Individuals can submit Form 15G (for those below 60 years) or Form 15H (for senior citizens) to the bank to avoid TDS if their total income is below the taxable limit.
3. **Bank’s Responsibility:**
- Banks are required to deduct TDS at the rate of 10% on interest income exceeding Rs. 40,000 (Rs. 50,000 for senior citizens) if the customer has not provided Form 15G/15H and if the total income exceeds the taxable limit.
### Provision:
- **Section 194A of the Income Tax Act, 1961:**
- This section mandates TDS on interest other than interest on securities, including interest on savings accounts, fixed deposits, recurring deposits, etc.
### Conclusion:
TDS is applicable on savings interest under Section 194A if the interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) per annum. However, individuals can avoid TDS by submitting Form 15G/15H if their total income is below the taxable limit. This provision ensures compliance with tax regulations while providing exemptions for small interest incomes.
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