Section 194A: Threshold Limits and New Section As Per IT Act 2025

What is Section 194A of Income Tax Act?

Section 194A of Income Tax Act requires deduction of TDS on interest payments other than interest on securities made to resident individuals or entities.

For the FY 2026-27 (AY 2027-28), the standard TDS rate is 10%, which increases to 20% if the payee does not provide a PAN.

TDS Threshold Limits

• Banks and Post Offices Limit: ₹50,000 per financial year for individuals below 60 years, and ₹1,00,000 for senior citizens.
• Other Entities Limit (Companies/Firms): ₹10,000 per financial

New Section As Per IT Act 2025

         
New Form For Quarterly Return : Form 140

Click To Know What Is Form 140 and How To File?

Time of Deduction

The deduction of tax must be made at the time of crediting such interest to the payee or at the time of its payment in cash or by any other mode, whichever is earlier.

Who is Liable to deduct TDS?

All persons such as a Partnership, a Company, an Association of Person (AOP), or a Body of Individuals (BOI) other than an individual and HUF subject to certain conditions.

An individuals or a HUF that their sales/ gross receipts/ turnover from business or profession exceeds Rs. 1 crore (in case of business) and Rs. 50 Lakhs in case of services.

Such as - Banks, Co-operative Banks, Post Offices, Companies & Other Entities etc.

Exemptions from TDS u/s 194A

Interest paid to banks for interest on savings, partnership firm to its partners, LIC, UTI, insurance companies or other financial institutions is exempted from TDS but taxable as income.

Due Date To Deposit TDS

• April to Feb: 7th of the following month.
• March: 30th of April

Form 121

If a resident individual (other than a company or firm) submits Form 121, no TDS is deducted if total income is below the taxable limit.

Explore More - Form 121 Income Tax: New Single TDS Declaration for All Eligible Taxpayers 2026