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Educational cess on tds on fixed deposit

B (Engin) (205 Points)

18 July 2012

The TDS on interest on fixed deposit is 10 %. Will there be an educational cess on that? Who should send the educational cess to the IT Department, BANK OR ASSESSEE?

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33 Replies

CA Gnanika (CA ) (485 Points)
Replied 18 July 2012

There wont be any educational cess for tds on interest on fixed deposits.

Please go through the link

https://www.saraltaxoffice.com/resources/tds-rates.php

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CA Pk jain (CA) (33 Points)
Replied 18 July 2012

No edu cess on TDS (expect in salary)

Further at the end of day ...u will have 2 pay the edu cess....Y will govt pay..buddy its ur income...u vl have to pay.....

CA MOHAMMED IRFAN (Chartered Accountant) (136 Points)
Replied 18 July 2012

In this case Section 194A will be applicable and the payer (in your case its bank) is requred to deduct TDS @ 10% only. No Education Cess or Secondary Higher Education Cess is to be deducted over and above 10% of rate of TDS.

As for as matter is concerned who would pay the Education Cess and Secondary Higher Education Cess. The aseesee will compute his income tax liability including Education Cess and Secondary Higher Education Cess in his Return of Income and in the other column of his Return he just need to show payment of tax by way of TDS, Advance Tax and Self Assessment Tax. Dear, I just trying to say that Income Tax which is deducted as TDS @ 10% can be used by assesse in receipt of such income for payment of amount of Income Tax as well as Education Cess and Secondary Higher Education Cess on his Total Income. Dear, payment of Tax liability is not bifurcated in Income Tax Return, its only the liability of income tax which is bufurcated in ITRs and payment is shown in total in ITRs.

Ruchi Gupta (CA) (52 Points)
Replied 18 July 2012

There will be no Education cess on Tds deducted on Interest on FIXED DEPOSITS.the rate is 10%.

B (Engin) (205 Points)
Replied 18 July 2012

MD IRFAN

Do you want to say no educational cess is needed to be paid on Tax that is paid for interest on fixed deposit?

Regards

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B (Engin) (205 Points)
Replied 18 July 2012

Ruchi

Do you want to say no educational cess is needed to be paid on Tax that is paid for interest on fixed deposit?

Regards

Ruchi Gupta (CA) (52 Points)
Replied 18 July 2012

Education cess is not deducted alongwith tds by the banks making payment of interest on fixed deposit, but education cess will be charged when final tax will be calculated at time of filing return of income.(on tax after taking credit of tds deducted by bank).

CA MOHAMMED IRFAN (Chartered Accountant) (136 Points)
Replied 18 July 2012

No I am just trying to say that your total payment of tax will be bifurcated in three parts viz income tax, EC and SHEC as you will show in your ITRs. In other way you can say that this 10% which is just rate of TDS can even be used for meeting the liability of Education Cess and Secondry Higher Education Cess. In nut cell just wanted to say that TDS is an advance tax which can be used for meeting three liabllities viz... Income Tax, EC and SHEC.

B (Engin) (205 Points)
Replied 18 July 2012

Ruchi:

Can you explain what you try to mean when you write "on tax after taking credit of tds deducted by bank"? What do you mean by taking credit of ? Which credit are you talking of here?

Regards

B (Engin) (205 Points)
Replied 18 July 2012

IRFAN:

What is EC and SHEC?

Is not it the liability of accessee while filing ITR 1, to pay education cess on the TDS that has been paid by bank to IT department for interest on fixed deposit?

Regards

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B (Engin) (205 Points)
Replied 18 July 2012

IRFAN:

What is EC and SHEC?

Is not it the liability of accessee while filing ITR 1, to pay education cess on the TDS that has been paid by bank to IT department for interest on fixed deposit?

Regards

Ruchi Gupta (CA) (52 Points)
Replied 18 July 2012

I MEAN TO SAY THAT YOU CAN DEDUCT THIS TDS DEDUCTED BY BANK FROM TOTAL TAX PAYABLE BY YOU AT TIMEOF FILING OF RETURN AND BALANCE TAX IS TO BE PAID BY YOU.(YOU ARE USING THIS TDS FOR MAKING PAYMENT OF TAX+ED.CESS+SEC HIGH. ED. CESS.

CA Gnanika (CA ) (485 Points)
Replied 18 July 2012

Mr B. Rate of tds on interest earned on fixed deposits is 10%, & the same would be deducted from your interest income by the bank.

But while computing your income. you have to consider all your incomes earned during the financial year & your tax payable has to be computed.

The tax payable by you includes education cess & SHEC as explained by MD IRFAN.

So in case if your tax payable is equal / less than the tds amount no need to worry.

In case if your tax payable is more than the tds amount, then u will be liable to pay taxes( in this case u will be paying EC & SHEC even on your interest income).

Hope it is clear now.