TDS ON INTEREST OTHER THAN SECURITIES

TDS on Interest other than Securities: – Section 194A of the Income Tax Act, 1961 deals with the provisions related to TDS on Payment of Interest other than Interest on Securities

WHO IS LIABLE TO DEDUCT: –

Any person responsible for paying any sum to any resident in the form/shape of interest other than interest on securities is required to deduct tax at the rate applicable at the time of credit/payment whichever is earlier.

Exception: –

• INDIVIDUAL/HUF, who are not required to get their accounts audited u/s 44 AB (a)/(b), are not required to deduct tax source.
• Tax not to be deducted if amount credited/paid is less Rs. 10000/- (if the Deductor is banking/Post Office company) for normal payee.
• This limit stand increased to Rs. 50000/- in case of Senior Citizen Payee.
• This limit stand decreased to Rs. 5000/- if deductor is not a Banking/Post Office company. (These limits of Rs. 5000/-, Rs. 10000/- and Rs. 50000/- is company wise not branch wise)
• Where Interest is paid/credited by the firm to its partner
• Payee can submit form no. 15G (for normal resident) and 15H (for Senior Citizen) provided certain conditions viz. total income is below taxable slab but interest paybale/credited to him is more than Rs. 10000/Rs. 50000/-.

WHEN TO DEDUCT: –

Tax has to be deducted at the time of credit or payment whichever is earlier. Credit here means credit entry passed in the books of account. This entry may be passed either directly crediting the account of Payee or through some dummy/suspense account. TDS deduction date will either this credit date or payment date whichever is earlier.

The tax has to be deducted if the total amount credited/paid during the year exceeds the limit specified above.

RATES OF TAX DEDUCTION AT SOURCE

Tax@ 10% has to be deducted on the amount paid/Credited. From June 1, 2015 tax has to be deducted on interest earned on RD account as well.

DEPOSITION OF TDS WITH GOVERNMENT AND FILING OF QUARTERLY STATEMENT

The tax so deducted by the Deductor has to be deposited with the Government of India through ITNS Challan No. 281 by 7th of the Next Month (in the case of TDS for March month relaxation is being provided to deposit it up to 30th April) . The most important information required at the time of depositing the challan is TAN (Tax Deduction Account Number) of the Depositor. While depositing the Challan PAN Details of Payees are not required as challan is deposited for the total sum deducted for all Interest Payments.

In addition to this Deductor is required to file Quarterly TDS Statement with Department wherein all the details regarding Name, Address, PAN, Date of payment/Credit, Amount Paid and TDS deducted is being provided by the Deductor and on that basis Tax Departments issues Form 16A for each Payee and these details are also being reflected in the Form 26 AS of the particular Payee. This return needs to be filed within one month from the last day of the quarter but for March Quarter Return relaxation has been provided for 2 months instead of one month.

INTEREST ON DELAY IN DEPOSITION OF TDS

There arises two circumstances viz.

• Either tax not deducted or less deducted: – In this case interest @ 1% per month for each month or part of the month will be charged from the date on which tax needed to be deducted to the date of actual deduction
• Tax has been deducted but not paid to government account: – Interest @ 1.5% per month for each month or part of the month will be charged from the date of deduction to the date of payment