Section 194A specifies that in case of banks the exemtion limit for the bank for TDS deduction in case of interest is Rs.10000. Is not that limit applicable to all banks / bank branches?
Are there any website links to know the exemption limit applicable to bank branches for TDS in case of time deposit?
If not, please let me know on what basis a branch fixes its exemption limit for TDS in case of time deposit.
11 April 2008
THERE IS NO TDS ON BOTH S.B ACCOUNT /R.D ACCOUNT INTEREST. AS FOR BRANCH WISE AND BANK WISE INTEREST LIMIT FOR TDS ,PL. REFER PARA TWO IN CLAUSE (c) OF SUB SEC 3 OF SEC 194A WHICH MAKES IT VERY CLEAR . IT IS NOT ONLY BANKS,THE BRANCH WISE LIMIT ALSO APPLIES TO BRANCH OF COOP. SOCIETY AND A PUBLIC COMPANY ALSO.
TO SUSTANTIATE MY ABOVE VIEWS, I REPRODUCE BELOW WHAT OUTLOOKMONEY.COM VIEWS AS PUBLISHED BY THEM.
"An important change was made a few years ago in the context of deposits kept in banks, co-operative societies engaged in banking business, and approved public companies engaged in the business of providing finance for housing like HDFC. In the case of time deposits kept with these institutions, tax is to be deducted if the interest payable by a branch to a depositor exceeds Rs 10,000 in a given financial year. In other words, the bank branch should deduct tax at source if the aggregate interest payable to a depositor on all his deposits (in the same branch) exceeds Rs 10,000. Of course, depositors often try to circumvent this provision by distributing their deposits to ensure that the interest earned in any one branch during each financial year does not exceed Rs 10,000.
Recurring deposits have been excluded from tax deduction provisions. Hence, interest earned on recurring deposits is not subject to withholding of tax. Interest on savings bank accounts is also not subject to TDS. Likewise, co-operative banks need not deduct tax in respect of the interest paid to shareholders on their deposits.
If the investor estimates that the tax on his total income from all sources is likely to be nil, he can file a declaration in form 15H and submit it to the interest-paying institution to ensure that he receives the interest without TDS. Of course, a false declaration invites fines and prosecution as already discussed." SOURCE:OUTLOOKMONEY.COM R.V.RAO
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