Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Tds on saving bank interest

CA.Shivam Aeran (Chartered Accountant) (48 Points)

25 July 2013

Can a bank will deduct TDS U/s 194 A on Saving Bank interest, please reply very urgent.........................

Reply
Follow
Share

15 Replies

chandan (Article Clerk) (22 Points)
Replied 25 July 2013

Originally posted by : Shivam Aeran
	Can a bank will deduct TDS U/s 194 A on Saving Bank interest, please reply very urgent.........................

TDS not deducted in case of saving Bank Interest.

Upgrade to CAclubindia Pro. Subscribe Now!

(Guest)

As per the provisions of Income Tax Act, there are certain investments/deposits on which no tax is required to be deducted without any limit of the amount of such interest. Tax is not deducted on any interest paid on any savings account or deposit in any of your recurring deposit account, be it with any bank, or Co-operative credit society or Cooperative bank. Even in case of any cooperative society any interest paid to its share holders, the Cooperative society does not have to deduct any TDS whatever be the quantum of interest. In addition to the above no TDS is required to be deducted by the post office on any interest paid on any deposit with post office like saving accounts, recurring deposits, fixed deposits or monthly scheme schemes. Likewise no TDS is applicable on various saving certificates like Kisan Vikas Patra and Indira Vikas Patra. Since interest on PPF account is exempt from tax, hence it is not subject to any TDS

1 Like

CA Nitin K. Varshney (FCA DISA CCA Peer Reviewer (ICAI)) (616 Points)
Replied 25 July 2013

Dear Shivam,

As per Finace Act, 2012 and 2013 Saving Bank Interest is exempt to the extent of Rs. 10,000/-. On the other hand as per sec. 194A, Tds on bank interest will not be deducted to the extent of Rs. 10,000/-. After combining these two provisions, i can say that Bank can deduct TDS on Saving Bank Interest, if it exceeds Rs. 10,000/- and it will be lawful.

Hope my reply will help u.

1 Like

Ca Priyanka mehta (CHARTERED ACCOUNTANT) (67 Points)
Replied 25 July 2013

there is limit in sec. 194A for payment of interest by bank on its saving accounts & deposits. so TDS will not be deducted if int amt. is less than 10000/- in a year.

1 Like

Rajesh (student) (193 Points)
Replied 25 July 2013

Dear Experts,

Please Note Practically Impossible to deduct TDS on Savings bank A/c.

Interest on savings bank will be calculated on daily basis and will be credite your account on every month.

1st month you are getting interest rs.1000 and 2nd month rs.500. bankers cannot keep track on it.

So, they won't do deduct tds on savings a/c.

whereas

TDS on FD can be identify so they can easily deduct.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

(Guest)

Dear Mr Nitin K Varshney and Miss Priyanka Mehta

As per Section 194A

(3) The provisions of sub-section (1) shall not apply—

(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act)

So as per above interest on saving bank are covered in above defination. Therefore no need to deduct TDS on Saving Bank Account.

For More Reference please cross check section 194A from Bare Act

Rashid Ahmad (Member of Financial Management & Technical Support Agency (FMTSA) in NRLM Aligarh) (33 Points)
Replied 25 July 2013

no tds liability arise on saving account interest.......

CA Surya Desraj (CA) (75 Points)
Replied 25 July 2013

Hey Shivam,

The answer to your question is yes.

But However as per the ACT Bank cannot deduct TDS on Savings Bank. But In some Banks there are some kind of schemes wherein the bank interest is invested in some kind of term deposits such as "MOD schemes" in which you have to ask the bank which amount is on SB and which on MOD or FD . And hence the SB part of interest is taxable and whereas FD part is taxable .

Hence TAx is deductible on FD part only.This u have to verify with the bank

Hope u Got what u were seeking for .

CA Sahil Garg (Searching for Job) (171 Points)
Replied 26 July 2013

Dear Shivam

TDS on saving bank interest is not deductiable as per section 194A. However the income shall be taxable.

CA Sahil Garg (Searching for Job) (171 Points)
Replied 26 July 2013

But some banks are deducting TDS on saving bank interest, i have statement of some banks in which TDS on interest on saving bank account is deducted.

Upgrade to CAclubindia Pro. Subscribe Now!

Abhinav (student) (564 Points)
Replied 05 April 2014

Yes I believe. 194A (if read completely n carefully) doesnt exempt savings interest. Those who say no, kindly support your answer.

Makesh R (DGM) (23 Points)
Replied 05 April 2014

S/B Account interest is not taxable.

ramsaran (accountant) (68 Points)
Replied 06 April 2015

sir,

I have bank saving intrest is 9650.00 and fd intrest is 2760.00 so tax on this amount.(9650+2760=12410-10000 = 2410 or 2760)

Stranger (.) (5531 Points)
Replied 19 May 2015

Both Interest from FD & Savings Account are taxable but TDS provisions u/s-194A is not applicable to savings bank interest though some banks wrongfully deduct TDS from Savings Bank Interest by crediting full interest & debit the customer A/c with TDS.

@ ramsaran: Rs.10,000/- deduction u/s-80TTA is not applicable to FD interest. Hence, Rs.9,650/- fully deductible u/s-80TTA but Rs.2,760 will be fully taxable. Hope ur doubt is cleared now.