Tds

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Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2014 Is tds applicable on the interest on advance tax remitted by the government..? if not why ?

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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07 June 2014 The provisions of TDS exclude interest paid to any government, bank or any financial institution. Therefore TDS is not applicable on interest on advance tax paid to government.

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2014 Sir it is that we hav paid the advance tax in excess so while paying the interest on such advance tax will the government deduct tax on such payment

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 June 2014 No. Government will nit deduct TDS on such payment. But this interest has to be included in your income under the head income from other sources.

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2014 sir why it will not deduct the tds on interest on advance tax paid

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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07 June 2014 In that case also, governemnt wont deduct tds on such interest.

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2014 Sir i want to know why is it so?

Ganeshbabu K

Ganeshbabu K (Expert)
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07 June 2014 IT IS NOT AN EXPENDITURE TO GOVERNMENT

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2014 sir, interest is expenditure to the government .....

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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27 July 2025 Got it, you're asking why **TDS is not deducted on interest paid by the government on advance tax refunds** and why the government doesn’t deduct TDS on that interest.

Here’s a clear explanation:

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### Why is TDS NOT deducted on interest paid by the government on advance tax refunds?

1. **Section 194A** of the Income Tax Act covers TDS on interest payments by banks and others **to individuals or entities**. However, **interest paid by the government on advance tax refunds is an exception**.

2. The government, when paying interest on excess advance tax, is **not considered a ‘deductor’ for TDS purposes** on this interest because:

* This interest is treated as **income in the hands of the taxpayer**, not an expense from the government.
* The government is **paying out a refund** along with interest as a reimbursement for excess tax paid, not as a usual interest payment liable for TDS.

3. **No TDS deduction is mandated because the government is the payer**, and by law, payments made by government on account of refund interest are exempted from TDS deduction.

4. Instead, the **recipient (taxpayer) must include this interest income under ‘Income from Other Sources’** in their tax return and pay applicable tax on it.

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### Summary:

* Government’s payment of interest on excess advance tax refund is **not subject to TDS**.
* It’s income for the taxpayer, and tax is paid by declaring it in the income tax return.
* This is a legal exception and designed to avoid the government deducting tax on payments it itself is making.

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If you want, I can help with the exact section references or how to report this interest income in your return. Would you like that?

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