TDS on Interest

Page no : 2

XYZ..... (-) (516 Points)
Replied 30 November 2010

PLEASE CLEAR ME - WHEN INDIVIDUAL PAY INTEREST TO BANK FOR LOAN TAKEN WE WILL NOT DEDUCT TDS.BUT IF INDIVIDUAL HAVE DEPOSITED AMOUNT WITH BANK OR BANK IS GIVING INTEREST ON FD WITH BANK THEN BANK WILL DEDUCT TDS AS INTEREST RECIEVING PERSON IS INDIVIDUAL ??????

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kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 30 November 2010

Dear Upjeet,

TDS provisions are to plug the revenue leakage. If the payment made to Govt undertakings or banks the expenditure are 100% accuracy.So, the provisions exempted for govt cos and banks.ok

regards

XYZ..... (-) (516 Points)
Replied 01 December 2010

dear kanagraj

my question was not on payment to banks but on tds to be charged on interest on fd recieved from bank ....

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 01 December 2010

Dear upjeet,

If TDS are deducted then you have to file your returns for interest received from the bank. So, the exchequer will get revenue. If it is not so many person who received the interest will not file their returns.So many people are filing their returns due to TDS, and they also show their other incomes also and pay taxes accordingly. So the main reason is to plug the revenue leakage, the provisions are there.Even some people never file their returns even after TDS. So those amount also goes to excehequer. The policy is to collect the tax , whenever the income arises.

regards

prasad bhatt (Chartered accountant) (26 Points)
Replied 03 December 2010

If an individual having tax audit or a firm paid interst on loan to a Urban co-operative society (called Nagari Sahkari Patsanstha in maharashtra) whether tds will be applicable to that individual or not. Since the Co-operative society does not have banking license. Banking licencse can be only with the co-operative bank.