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TDS rate on deposits

TDS 426 views 2 replies

Sir..

My bank have deducted TDS u/s 194A on deposits. They deducted 15.7% on the internet portion upon maturity. I came to know that the rate of deduction is 10% as per the Act. I receive no response from the banker even after repeated requests. Kindly let me know the logic behind 15.7%. pls help.

Regards

Replies (2)

The deduction of 15.7% by your bank under Section 194A seems incorrect.

Here's why: Correct TDS Rate The correct TDS rate under Section 194A for interest on deposits is: - _10%_:

For interest paid on deposits, if the amount exceeds ₹40,000 in a financial year (₹50,000 for senior citizens). Surcharge and Cess

However, there are additional levies that might explain the 15.7% deduction: - _Surcharge_: A 10% surcharge is applicable on TDS if the deductee's income exceeds ₹50 lakhs. -

_Cess_: A 4% health and education cess is applicable on the TDS amount.

Calculation Assuming the surcharge and cess are applicable, the calculation would be: 10% (TDS) + 10% (surcharge) = 11% 11% + 4% (cess) = 15.40% ≈ 15.7%

 However, this is still not justified, as the surcharge and cess should not be applicable directly on the TDS rate.

Actionable Steps Given the bank's unresponsiveness, consider:

1. _Filing a complaint_: Reach out to the bank's nodal officer or the Banking Ombudsman.

2. _Claiming refund_: File your income tax return and claim a refund for the excess TDS deducted.

 

Thank you sir for the valuable reply...


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