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Accrual method on tds

06 April 2015

I want to know how do I find out if my Bank is deducting TDS on FD with interest payable on maturity, and FDs with Interest payable monthly every Financial Year or they are going to deduct TDS on FDs whose Interest is payable on maturity in the Year the FD matures?

And I want to know how do I setup method of paying TDS with Accrual method if I was using Accrual Method for TDS deduction or Cash Method and how to migrate to Accrual Method for TDS deduction depending upon which method I'm using atm?

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2 Replies

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 06 April 2015

Interest on TDs is deductible u/s 194A by Banks on interest on Fixed Deposit where the Interest on.Fixed Deposit exceeds Rs 10000 p.a. On the Fixed Deposit Certificate , the Interst Amount that the Investor shall be entitled to is calculated and Printed on.the Certificate itself. So in case the interest Amount on FD exceeds Rs 10000 in a financial year, Tds shall be deducted.

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Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 06 April 2015

Now the second part of your Question TDS has to be deducted on.certain specific payments only. In Some cases the liability to deduct TDS arises at the time of payment only whereas in other cases the Liability arises at the time of cedit in books or payment whichever is earlier.. Hence you need not change your mthod of Accounting all of a sudden without going through the provisions of TDS.