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How to pay TDS if all income is from interest only?

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)

10 July 2009

I am facing a problem. My all income comes from interests on FDs as I have no pension. Most FDs mature after 2-3 years. I have a few FDs whose interest is credited quarterly in my SB A/C to meet daily expenses. As the TDS is deducted by banks on accrued income every March end, the value of FD reduces by TDS amount & hence final maturity value becomes much less than what it should be. Why income tax on accrued income & not on real income at the time of maturity of FD? May be it can be made as an option at the time of investment?

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7 Replies

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 10 July 2009

Mr Rakesh

As in accounting terms there are two types of method of accounting .i.e. Accural & Cash .....................And almost accural basis is followed by every person. And as per section 194A , it is mentioned that Banker (Payer) is liable to deduct TDS on interest at the time of payment OR at the time of credited such income to the account of payee or any suspense account, WHICH EVER IS EARLIER..........

As bank credit the provisional interest income on your account on yearly basis , so as per the above provison Bank deduct TDS on yearly basis........................

Hope you are clear now.............

RAKESH JAIN (RETIRED COMPUTER PROFESSIONAL) (369 Points)
Replied 10 July 2009

Thanks. Reply make its clear but does not make me happy. Possibly to handle this, I must have separate FDs (every year) which mature near the time of payment of TDS & advance taxes & pay TDS & advance tax from these matured FDs. This way possibly I can save some money!! Thanks any way. Best wishes, RAKESH

Sorabh Gupta (Manager ( Taxation )) (877 Points)
Replied 10 July 2009

Mr. rakesh

I u want that TDS shuld no be deducted then ther is one more options you have................. I.e. you can apply to Assessing officer then that AO will issue a certificate on which it is mentioned that TDS on ur income shuld not be deducted OR TDS shuld be deducted at lower rate...........