Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Tds on fixed deposit

kiran (Student) (98 Points)

13 March 2017

IS TDS NEED TO BE DEDUCTIBLE BY A BANK ON FIXED DEPOSIT INTEREST PAYBALE TO GOVERNMENT? If Yes please specify the section and the entire provision relating to this? Thanks.

Reply
Follow
Share

2 Replies

(Guest)

What is Section 194A?

Section 194A deals with deduction of TDS on interest other than interest on securities like Interest on Fixed Deposits, Interest on Loans and Advances other than banks.
This Section is only applicable to a resident. Thus, the provisions of section 194A are not applicable in case of payment of interest to a non-resident.
Payments made to non-residents are also covered under TDS mechanism. However, tax in such a case is to be deducted as per Section 195.

When does TDS under Section 194A need to be deducted?

The Payer/Deductor shall deduct TDS if the amount of such interest paid or credited OR is likely to be paid or credited in a financial year, doesn't exceed

10,000 where the payer is
1. Banking company or any bank or a banking institution
2. Co-operative society engaged in the business of banking
3. Post office (on deposit under scheme framed and notified by Central Government).

Upgrade to CAclubindia Pro. Subscribe Now!

Suresh Pai S (Tax Consultant) (1029 Points)
Replied 13 March 2017

Whether as the bank has already paid the TDS to the government, the question of payment comes only when your return of income is prepared.

If you are a person whose taxable income is below the basic exemption limit, you can claim the refund.

The TDS deducted on fixed deposit is only 10%. Hence if you are a person in a higher slab, you need to pay balance tax to the government.