Rate of TDS on Interest Income under section 194A of the Income Tax Act
NATURE OF PAYMENT
Interest other than Interest on Securities
EXCEPTIONS: Check TDS Rates Chart For Year 2013-14
No tax shall be deducted in the following cases –
- Where the payee is –
- Any banking company/ co-operative land mortgage bank.
- Any financial corporation
- LIC / UTI
- Any company or society carrying on insurance business
- Any other notified institution
- Where the firm pays interest to its members
- Where a co-operative society pays interest to its members
- Where a co-operative society pays interest to another society
- Interest on notified deposit schemes of Post office, some notified deposits schemes are –
PO RT A/c, PO time deposit A/c PO MIS, KVP, JVP, NSC
Note: The Senior Citizen Scheme is not notified under this list. Hence TDS shall be necessary. Where a bank or a co-operative bank pays or credits interest on deposits other than time deposits.View Form 26AS TDS Deduction Status Online
- If a bank / co-operative bank pay interest on time- deposit, TDS shall be necessary. Here tie deposit means deposit (other than recurring deposits) repayable on expiry of fixed periods.
- Where a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank pays or credits interest on deposits.
- Where interest is paid or credited by the central Govt. under different provisions of direct taxes.
- Where interest is paid on compensation amount awarded by the Motor accidents claims tribunal provided the amount of interest during a financial year does not exceed Rs. 50,000/-
- Interest payable on Zero coupon Bonds
- Interest payable by a offshore Banking unit (OBU) to NOR on deposits or Borrowings
- In all other cases, if the total amount of interest payable during financial year does not exceed the prescribed limit, as discussed below:
If the payer is (i) a bank, (ii) a co-operative bank, (iii) post office — 10,000/-
If the payer is any other person – 5,000/-
Note: If the payer is bank / co-operative bank / housing finance company, the exemption limit of Rs. 10000 or 50000 shall be applied separately to each branch of payer.
Adjustment of excess / deficiency:
The payer can increase or reduce of amount of TDS so as to adjust previous excess / short deduction during the same year.