TDS on interest on fixed deposits

This query is : Resolved

MITHRA (Querist)
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29 January 2009 suppose an individual has deposited Rs. 5 lakhs for 2years in a fixed deposit scheme in which he will get the compounded interest along with the principal amount only at the time of maturity. in this case should TDS be deducted from this individual every month on the interest accrued monthly or should TDS be deducted only at the time of payment at the time of maturity? which is the relevant rule/ act/ circular concerning this. please help.

K V Subba Rao

K V Subba Rao (Expert)
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29 January 2009 U/s 194A, Banks are required to affect TDS, if total interest for a finanical year exceeds Rs 10000

If Bank affects TDS regulary during the tenure of FD, include Interest in Income and claim TDS

If Bank does not affect TDS regulary during the tenure of FD, include Interest in Income and claim TDS at the time of maturity

This position applies for Individual. In case of Companies, Interest has to returned every year irrespective of whether Bank affects TDS regularly during the tenure of FD or not