24 August 2009
I too want to agree with your views. But considering that neither the budget proposal nor the notes to the clauses covers this aspect, I tend to think it to be a typographical error. It will also lead to a situation wherein an individual and corporates will be treated at par for TDS rates, which I feel is unlikely.
28 July 2025
Good observation! Here’s a detailed clarification on the **TDS rate for interest other than securities** for a **domestic company** in the context of your FY 2009 discussion:
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## 1. **What does the Finance Act say?**
* **Finance Act, Schedule I, Part II** generally specifies the TDS rates for various payments. * For **interest other than securities**, it lists a rate of **10%** for payments to residents (including companies). * This rate applies for interest payments such as bank interest, interest on loans, deposits, etc.
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## 2. **Where does the 20% figure come from?**
* Sometimes, tax ready reckoners or secondary references may mistakenly mention **20%**. * This could be a **typographical error** or confusion with **Section 194A** where rates might have been different earlier or for other categories. * Historically, the **20% rate** could have been cited for **non-resident interest** or under different provisions.
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## 3. **Which rate has precedence?**
* **The Finance Act’s rate (10%) prevails** as it is the authoritative legal text. * The **tax ready reckoner or other sources** are only secondary references and can have errors.
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## 4. **Practical implications:**
* For a **domestic company receiving interest (other than securities)**, **deduct TDS at 10%** under **Section 194A**. * This aligns with the legislative intent and ensures compliance.
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## 5. **Additional notes:**
* There should ideally be **differential TDS rates** for individuals, HUFs, and companies. * However, in this case, it appears **10% applies to both individuals and companies** (subject to conditions and thresholds). * Always check for updates in the Finance Act for the specific year as rates may vary.
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### **Summary:**
| Payment Type | Payee Type | Correct TDS Rate FY 2009 | Reference | | -------------------------------- | ---------------- | ------------------------ | ------------------------------- | | Interest (other than securities) | Domestic company | **10%** | Finance Act Schedule I, Part II |
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If you want, I can help you with updated TDS rates for interest for more recent years or help cross-check any other discrepancies you find!
CAclubindia
