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Query regarding 194a

CA Abhishek Goyal (Chartered Accountant) (504 Points)

20 December 2014

Hello Friends,

My Query is related with TDS in case of Sec. 194A. Following is the Question:

I have 3 Fixed Deposit A/c in SBI bank in 3 different Branches. All FD Amounts are Rs. 100000 @ 9%, 100000 @ 8.5%, 100000 @ 9.5% respectively.

So my Question is whether TDS is deducted or not? Give the explainaion regarding ur answer.

Thanks in Advance.

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7 Replies

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13531 Points)
Replied 20 December 2014

As per section 194A, TDS is required to be made out of interest paid by a bank when such payment exceeds Rs. 10,000/- and in respect of term deposits such sum shall be computed with reference to income credited or paid by a branch of the banking company.

Hence each FD is to be counted as a separate one and since none of the FDs carry interest of more than 10000/- TDS provisions are not attracted.

CS Advocate Abhishek Goyal (M Com FCS LLB M-AIMA ) (13531 Points)
Replied 20 December 2014

Hence each FD is to be counted as a separate one and since none of the FDs carry interest of more than 10000/- TDS provisions are not attracted.

CA Abhishek Goyal (Chartered Accountant) (504 Points)
Replied 20 December 2014

Thank You So Much Sir for Your kind reply.

What if I made FDs in same branch? will ur answer differ?

mis128 (s) (22 Points)
Replied 20 December 2014

Banks have been advised to merge all Accounts / Customer IDs into a Single entity when the PAN is Common. Therefore, even if your FDs have been kept with different branches or having different Customer IDs, these all may be merged together for TDS purpose. Some banks have started such a practice. Good luck to you!

Z ( ) (2960 Points)
Replied 21 December 2014

FDR in same branch shall be merged

Although if bank merge the accounts but the liability to deduct tax is branchwise so, it should not affect TDS matter

Text from 194A

[(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, 50[does not exceed—

(a) ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);

(b) ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;

(c) ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified51 by it in this behalf; and

(d) five thousand rupees in any other case]:]

Provided that in respect of the income credited or paid in respect of—

(a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or

(b) time deposits with a co-operative society engaged in carrying on the business of banking;

(c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes 53[and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] 54[***],

55[* * *] the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be;]"