TDS on Interest other than Security Interest (Section 194A): Here we will discuss the complete detail of TDS deduction on interest other than interest on securities u/s 194A. You can find here TDS rates, exemption limit, responsible persons, time of deduction, TDS returns, the time limit for deposit TDS and more. The information given here is updated as per finance bill 2022. It will apply for Assessment year 2023-24 and financial year 2022-23.
|Person Responsible to Deduct Tax||Any person other than Individual & HUF (Ind/HUF required to deduct TDS, if last year’s turnover is more than 1 crore in case of business or gross receipt is more than 50 Lakh in case of profession)|
|Exemption Limit||Payment of interest by banks to Sr Citizens Rs.50,000
Payment of interest by banks to others Rs.40,000
Payment of interest by others Rs.5,000
|Time of Deduction of TDS||At the time of payment or credit whichever is earlier|
|Time for Deposit of TDS||Within one week from the last day of the month of tax deduction. For the month of March, before 30th April.|
|Certificate of TDS||Form 16A for each quarter is to be issued within 15 days from the due date for furnishing the statement of tax deducted at source under rule 31A i.e. on or before 15th August, 15th November, 15th February and 15th June|
|Quarterly Return of TDS||In Form No.26Q on or before 31st July, 31st October and 31st January for the first three quarters and on or before 31st May for the last quarter|
|AO’s Certificate for Deduction at Lower Rate or Non-Deduction||Yes, Application in Form No. 13, Appropriate Certificate to be issued by AO|
|Is Self Declaration by Payee for Non-Deduction Admissible||Yes, it can be filed, by a person other than Company or Firm, Declaration to be submitted in duplicate in Form No. 15G/ 15H.|
Who is liable to deduct tax on interest other than interest on securities?
- Any person other than Individual & HUF (Ind/HUF required to deduct TDS, if last year’s turnover is more than 1 crore in case of business or gross receipt is more than 50 Lakh in case of profession)
TDS Rates u/s 194A
- In case the payee is a person other than a company resident in India – 10%
- In case the payee is a domestic company 10%
The rate of TDS will be 20% in all cases if PAN is not quoted by the deductee
No surcharge, education cess and SHEC shall be added. Hence, TDS shall be deductible at basic rates.
Time of deduction
Tax is to be deducted either at the time of payment of interest in cash or by the issue of cheque or draft or by any other mode or credit of it to any account, whichever is earlier.
Thus, section 193 does not require tax to be deducted at source in respect of the provision for interest accrued but not due, made by an assessee where the ultimate recipient of such interest accrued but not due, cannot be ascertained at the point of time when the provision is made.
Time Limit for Deposit of TDS
When the tax is deducted by the office of the Government:
- On the same day where the tax is paid without production of income-tax challan; and
- On or before seven days from the end of the month in which the deduction is made, where tax is paid accompanied by an income-tax challan.
In any other cases
- The TDS has to be deposited on or before the 30th day of April, where the income or amount is credited or paid in the month of March; and
- In any other cases, on or before seven days from the end of the month in which the deduction is made.
Time Limit to Issue TDS Certificate (Form 16)
The dates when the deductor is responsible to issue Form No.16 (TDS certificate) to the deductee, is within 15 days from the due date for furnishing the statement/returns of tax deducted at source under rule 31A.
Please keep in mind w.e.f. On 1-6-2016, the due dates to deposit TDS Returns/Statement changed. Check here for complete detail.
- 15th August
- 15th November
- 15th February
- 15th June
The following are the due dates for TDS on Interest other than Security Interest (Section 194A).
The deductor is responsible to submit the TDS statement/TDS returns in Form No. 26Q on or before
- 31st July
- 31st October
- 31st January
- 31st May
Is any provision for non-deduction of tax?
The deductee should provide form no.15G to the deductor for non-deduction of TDS in the case of individuals. The form no. 15H should be submitted in the case of Senior citizens. In case of any declaration invalid, the deductor shall deduct the tax @ 20%.