194A TDS on Interest

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Quick Summary

TDS (Tax Deducted at Source) under Section 194A of the Income Tax Act generally applies to interest income, including that from savings accounts. However, there are specific exemptions. TDS is not required if your total annual savings interest income is below £40,000 (or £50,000 for senior citizens). You can also avoid TDS by submitting Form 15G or 15H to your bank if your overall income is below the taxable threshold.

gifty

gifty (Querist)

28 January 2021 Please share your views " Whether TDS is required to be deducted u/s 194A on savings Interest?"If not please specify the provision.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 January 2021 TDS not applicable on savings bank interest.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

29 January 2021 TDS not applicable on Banking Interest

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

06 July 2024 As per Section 194A of the Income Tax Act, TDS (Tax Deducted at Source) is applicable on interest other than interest on securities. Savings account interest, typically earned from banks or post offices, falls under this category. Here’s a clarification regarding TDS applicability on savings interest:

### TDS Applicability on Savings Interest:

1. **Threshold Limit:**
- TDS on interest income from savings accounts is not applicable if the total interest income during the financial year does not exceed Rs. 40,000 for individuals (Rs. 50,000 for senior citizens).

2. **Form 15G/15H:**
- Individuals can submit Form 15G (for those below 60 years) or Form 15H (for senior citizens) to the bank to avoid TDS if their total income is below the taxable limit.

3. **Bank’s Responsibility:**
- Banks are required to deduct TDS at the rate of 10% on interest income exceeding Rs. 40,000 (Rs. 50,000 for senior citizens) if the customer has not provided Form 15G/15H and if the total income exceeds the taxable limit.

### Provision:

- **Section 194A of the Income Tax Act, 1961:**
- This section mandates TDS on interest other than interest on securities, including interest on savings accounts, fixed deposits, recurring deposits, etc.

### Conclusion:

TDS is applicable on savings interest under Section 194A if the interest income exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) per annum. However, individuals can avoid TDS by submitting Form 15G/15H if their total income is below the taxable limit. This provision ensures compliance with tax regulations while providing exemptions for small interest incomes.

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