- CA Sandeep Kanoi
- | Income Tax - Articles- Featured
- 17 Jul 2019
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- 7 comments
Section 194A of the Income Tax Act deals with the provisions relating to deduction of TDS on interest (other than interest on securities). Interest like interest paid on an unsecured loan, interest paid by banks on fixed deposits, interest paid on loans and advances, etc. are covered under the provisions of section 194A.
The present article helps to understand the provisions attached with Section 194A of the Income Tax Act, 1961.
Basic Provisions of Section 194A –
Essential features of section 194A are summarized hereunder –
- Any person, other than individual or HUF, who is paying interest (other than interest on securities) to a resident is required to deduct TDS.
- If the individual or HUF are liable to get their accounts audited as per section 44AB [clause (a) or (b)], then, such individual or HUF would be required to deduct TDS on payment of interest (other than interest on securities) to a resident as per provisions of section 194A.
- Section 194A is applicable only in case of payment of interest to a resident i.e., the provisions of section 194A doesn’t apply to the payment of interest to a non-resident. The same is covered within the purview of section 195.
Point of time when TDS is to be deducted –
The Deductor liable to deduct TDS as per provisions of section 194A is required to deduct TDS within earlier of the following dates –
- At the time of credit of income to the payee’s account; or
- At the time of payment in cash, cheque, draft or any other mode.
Rate of TDS on interest other than interest on securities –
If the provisions of section 194A of the Income Tax Act gets attracted, the Deductor is liable to deduct TDS on interest other than interest on securities @10%.
However, if the Permanent Account Number is not furnished, in that case, the Deductor would be liable to deduct TDS @20% i.e., maximum marginal rate.
The Time limit of depositing the deducted TDS –
The Deductor who has deducted TDS as per provisions of section 194A are required to deposit the same within the following due dates –
| Months | Due date |
| April to February | 7th of the next month |
| March | On or before 30th April |
Threshold Exemption limit under section 194A –
TDS is not to be deducted under the following case –
| Amount | Category of Payer |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Bank |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Co-operative Society |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Post office |
| An aggregate amount of interest doesn’t exceed INR 5,000 | In any other case |
List of interest exempted under Section 194A –
Some of the important lists of interest which is exempted under section 194A are –
- Interest paid to any bank, financial corporation, Life Insurance Corporation Unit Trust of India, any company or a co-operative society engaged in the insurance business.
- Interest paid by a partnership firm to the partners.
- Interest paid by co-operative society to its members.
Question –
What is Section 194A?
Section 194A covers provisions relating to deduction of TDS on interest other than interest on securities. If the provisions gets attracted, the TDS @10% is to be deducted by the Deductor.
What is 194A payment?
Section 194A payment is in the form of interest (other than interest on securities). Interest payment like interest on fixed deposit, interest on any loan or interest on recurring deposits are covered within the same.
Is TDS deducted on interest paid to bank?
No, when interest is paid to bank against the loan taken, TDS provisions are not applicable, and hence TDS is not deducted on interest paid to the bank.
Who is liable to deduct TDS under 194A?
The person who is paying interest (other than interest on securities) is liable to deduct TDS if the provisions of section 194A get attracted.
Is TDS deducted on interest to partners?
No interest paid by the partnership firm to partners are not covered within the purview of section 194A, and hence TDS is not required to be deducted.
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Dear sir/madam,
I have to state the following-
i)My date of birth is January 1961. For which FY I shall be treated as senior citizen for income tax purpose?
ii)We have received an email from IT dept u/s 194A informing us that we have not paid Tax on Rs.256731=00 informed by various banks. This includes an interest in Fd’s and also an interest in saving banks.
iii)Out of the above-mentioned we have already paid tax on Rs.69504 as this was mentioned in form 26 AS and filed ITR and got refund also of Rs. 4920=00
Now I am preparing revised ITR u/s 139(5), please let me know the following-
i)What amount should be shown as ‘income from other sources’ should it be Rs. 256731=00 or after excluding interest on saving banks from Rs.26731 in order to claim exemption up to Rs.10000=00 u/s 80TTA?
ii)What should we do about the IT refund of Rs.4920=00.already got?
iii)How much we should deposit tax as ‘self-assessment tax’?
Kindly reply immediately about above mentioned. Your additional advice is also welcome.
Thanks
SIR,
my production start 01.07.2020.
can interest bifurcation up to 30.06.2020 and 1.07.2020 to 31.03.2021 for capitalized interest expense ? if yes , than TDS Applicable for the period 01.04.2020 to 30.06.2020
Suppose a LLP took loan from one of its partner. whether interest payable to the partner on that loan amount is liable to tds?
MY SON INCOME FROM INTREST ON DEPOSITS IN HDFC DEPOSITS IS APPX 150000 WHETHER TDS IS DEDUCTABLE OR NOT WHOSAE TOTAL ANNUAL INCOME IS LESS THAN 500000
My internet income on Bank Fixed deposit for the financial year 2020-21 (assessment year 2021-22 would be around ₹4,00,000.
I am a senior Citizen and have submitted form 15H to the bank.
Please advise whether bank can deduct TDS on interest paid to me.
My taxable income doesn’t exceed ₹5,00,000.
Thanks
Is the TDS deducted by the bank on interest received from FDs of cooperative society ?
Is the TDS deducted by the bank on the FDs of cooperative society ?