Section 194A – TDS on Interest other than Interest on Securities
What is Section 194A?
When does TDS under Section 194A need to be deducted?
- 10,000 where the payer is
- Banking company or any bank or a banking institution
- Co-operative society engaged in the business of banking
- Post office (on deposit under scheme framed and notified by Central Government).
- 5,000 in any other case
When is Tax deducted at NIL rate or lower rate?
- Recipient is a person other than a company OR firm
- Tax on total income of the previous year (PY) is NIL
- Total income does not exceed the exemption limit (i.e. for AY 2016-17, Rs.2,50,000 or Rs.3,00,000 or Rs.5,00,000, as applicable). This condition is NOT applicable if the recipient is a resident senior citizen. Such a declaration shall be given in duplicate form 15G (15H for senior citizens). In case of Senior Citizens Saving Scheme, 2004 (SCSS), investors can submit the declaration. Nominees of investors of SCSS can also produce the declaration at the time of payment after the death of the depositor. On submission of declaration to the bank, bank shall not deduct tax (subject to the conditions) on payment of interest.
When an application is submitted in Form 13 under Section 197
- As per provisions of Section 197, the recipient can apply in Form no.13 to the Assessing Officer to get a certificate authorizing the payer to deduct tax at lower rate (or deduct no tax, if certain conditions are satisfied).
- There is no time limit for application and it can be filed at any time before actual deduction of tax. If the recipient does not have PAN, he cannot apply for the certificate.
- The certificate shall be issued, directly to the person responsible for paying income, on a plain paper, under an advice to the applicant.
- The certificate cannot be issued with retrospective effect. The recipient may furnish copy of such certificate to the person responsible for paying the income for lower/no deduction of tax at source.
Who is responsible for deducting this TDS?
What is the rate of TDS?
- 10%, if PAN is furnished
- 20%, if no PAN is furnished
What is the time limit on depositing TDS ?
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