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Bank Fixed Deposit made out of Agriculture Income and TDS

nba (abcd) (50 Points)

24 May 2011

This is regarding bank fixed deposit made out of agriculture income. Bank said that they will deduct tax if interest income crosses Rs. 10,000. Bank has asked assessee to get PAN Card, so TDS will be at 10%. Without PAN Card it will be 20%. Is this something normal? Do Farmers want to have FD need to get PAN cards now? Is there any way to claim tax exemption? assessee wants to make FD of Rs. 1L. What about return filing if TDS got deducted?

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9 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 24 May 2011

1) Yes. The Assessee will have to quote his PAN to the Bank to avoid deduction of TDS @ 20%. Bank will deduct TDS @ 10% on Interest earned on Fixed Deposit if PAN is provided.

2) He can ask the Bank to give him the TDS Certificate (ie. Form 16A). He can claim the TDS by filing his Income Tax Return and get the Refund, if his Gross Income is below the taxable limit.

Regards,
Devendra

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CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 24 May 2011

in this case tds will be deducted and you can claim refund after filing return

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 24 May 2011

further if assesse wants to make fd of 1 lakh than he can make two fd in two banks hence tds will not be deducted as interest will not exceed 10000.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 24 May 2011

Originally posted by : nba
	This is regarding bank fixed deposit made out of agriculture income. Bank said that they will deduct tax if interest income crosses Rs. 10,000. Bank has asked assessee to get PAN Card, so TDS will be at 10%. Without PAN Card it will be 20%. Is this something normal? Do Farmers want to have FD need to get PAN cards now? Is there any way to claim tax exemption? assessee wants to make FD of Rs. 1L. What about return filing if TDS got deducted?

Bank FD interest is not agricultural income, hence TDS applicable.

Get PAN card and provide to bank, as to get adjustment of TDS deducted without pan, iits prettry tough.

Ninad Pandit (CA Final Student) (254 Points)
Replied 24 May 2011

he has to give PAN card copy to bank. and also he can submit Form 15G to bank if his gross total income is below exemption limit so bank will not deduct TDS on his FD interest income.

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nba (abcd) (50 Points)
Replied 24 May 2011

I am still confused.

According to rule 114C(1)-a section 139A doesn't apply to a person having agriculture income and want to make time deposit (rule 114Bc). He needs to furnish Form No. 61. If he submits both Form No. 61 and Form 15G, he doesn't need to have PAN Card and no tax, correct?

Rajesh K (Finance Manager) (44 Points)
Replied 24 May 2011

Sec 206AA overrules all other section. Hence PAN is a mandatory requirement. Otherwise TDS @ 20% will be deducted from the interest payments.

Ramesha D S (proprietor) (22 Points)
Replied 28 November 2012

Dear all

My client has kept 1 crore fixed deposit in bank and getting 9.5% interest. He kept this deposit out of his agricultural income. He does not have any income other than agriculture. Is there any possiblities that he can claim this as agricultural income?? or any other way he can avoid tax deduction? He is asking me to get exemption certificate from IT department. I Advised him since he croses his exempted income limit he will not get the benefit. If give me suggestion.

Regards

Ramesha D.S