Sec. 194A Interest other than Interest on Securities

does not exceed Rs.10,000/- payable by a Banking company, Co-op.society engaged in banking business and post office... B In the case of the following Payees: i Banking Company or a Co-o

Who is liable to deduct tax?

The person (other than an Individual or

HUF) who is responsible for paying to

a resident, any income by way of

interest other than ‘Interest on

Secutiries”,

TDS u/s 194A to be made also by

individuals & HUFs covered u/s 44AB

 When TDS is to be made ?

or by issue of cheque or draft or by any

Credit to any Account:

the books of the Payer.

 Interest as referred to in Sec 194A includes payments made in respect of ;

 Where no tax is to be deducted at source u/s 194A

(i) If the aggregate amount of interest during the F.Y does not exceed Rs.10,000/- payable by a Banking company, Co-op.society engaged in banking business and post office

 (ii) If the amount of interest does not exceed Rs.5,000/- in any other case

(B) In the case of the following Payees:

 (i) Banking Company or a Co-op Society engaged in banking business

 (ii) Financial Corporation established under a central, state or provincial Act

 (iii) LIC/UTI/ any Company or Co-op Society carrying on Insurance business / such other institution / association or body or their class as notified by Central Government in the Official Gazette

(iv) Partner of a firm if the payer is firm.

 (v) Member of a op.society or any op.society where payer is a Co-op society

Co- (vi) Depositor of a notified scheme framed by Central Government

 Notified Schemes:Notified Schemes: Post Office R.D A/c./ Post office Time Deposits / Monthly income A/c / N.S.C / Kisan Vikas Patras/ Indira vikas patras

(vii) Depositor with a Primary agricultural society or a primary credit society or a co-op land mortgage bank or a Co-operative Land Development Bank.

 (viii) Depositor of a banking company or of a Co-op society engaged in banking business where Time deposits have been made before 1-7-1995

 (ix) Any assessee where interest payable to him under direct tax laws

 (x) Interest credited to Non-Resident (External) A/c

 (xi) Interest on R.D & Savings A/c with banks or Co-op societies

 (xii) Interest on the compensation amount awarded by Motor Accidents claims Tribunal

where the aggregate interest paid during the F.Y does not exceed Rs 50,000/-

 (xiii) Interest Interest payable payable by by an an

Infrastructure Capital Fund or a Public

relation to a Zero Coupon Bond issued

by such company or fund or Public Sector Company or Bank.

 (C) Where Self declaration under Form No 15G is by a person other than a company

or firm In the case of a senior citizen (65 years or more) the declaration should be under Form No 15H.

absence of PAN of the declarant & TDS to

be made @ 20%.

(D) No TDS by the off-shore Banking unit from the interest paid:-

by a non-resident or a person not ordinarily resident in India.

from a non-resident or a person not ordinarily resident in India.

 (E) Entities like Charitable Trusts, Scientific

income is exempt U/s 10 on fulfillment of

deduction in Form No 13.

 (F) Certain Entities whose income is unconditionally exempt u/s 10 (Example: Funds or Authorities or Boards or Bodies,

by whatever name called)

the Payee.

 Notes:

“Securitised Bonds”.

Charges.

basis every year, irrespective of the date

of payment on maturity.

 (iv)If Renewal of deposit is made retrospectively, TDS U/s.194A to be made

payments)

Rs.10,000/- should be seen only w.r.t the First Holder.

 (vii) TDS U/s 194A to be made on accrual basis annually in respect of cumulative deposits.

 (viii) TDS U/s 194A to be made on Interest

on RFC deposits to Resident but not ordinarily Resident Persons, even if such income is exempt U/s 10

 (ix) Form H should be available with the deductor before the payment or credit of interest

 (x) It is the responsibility of the deductor to forward Form 15G/15H to the CIT or CCIT within 7 days, from the end of the month in which it is received – Failure to do so may attract penalty U/s 272A(2)(f) @ Rs.100/- for each day of default

 (xi) TDS U/s 194A to be made on the Gross Interest payable and not on the net interest after mutual setoff between the parties.

Taxable but also any interest.

 (xiii) False declaration in Form 15G/15H Prosecution U/s 277.

 (a) If the amount of tax involved is > Rs 1 lakh, Rigorous imprisonment for a term which shall not be less than 6 months but which may extend

to 7 years and with fine

 (b) In any other case, not less than 3 months / which may extend to 3 years and with fine

 xiv)Abetment of False return etc U/s 278:

 (Example: Bank Manager forwarding False Form No 15G to the CIT) - Same Penalty as

in (xiii) above

 (xv) Trust making interest payments to Trustees who are assessed either in Individual capacity or representative capacity – TDS to be made since the Trust is not entitled to go behind the constitution and see the status of the beneficiary

 (xvi) A minor cannot file a declaration in Form No 15H.

end (i.e 1st April) TDS should have been deducted The deductor violated the law and incurred the liability by not deducting before the year end (i.e 31st March).

 (xviii) TDS U/s 194A is to be made when interest is paid in pursuance to court orders Similarly, TDS is to be made on Interest payment on awards of other Tribunals like Motor Accidents Tribunal, Insurance Companies in delayed payments on settlement of claims.

 (xix) TDS U/s 194A is to be made on Interest Payments to Canfin Homes (which are distinct from Banks)

 (xx) payer of interest not concerred with

tax liability of payee.

Not covered u/s 194A.

loan repaid –TDS is a must u/s 194A.