Tds on interest payment to financial institutions

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This query is : Resolved

Rahul Gupta (Querist)

04 October 2012 Dear Sir,
I want to know that TDS is applicable in case of interest payment to Financial Institution or not.and i want case law and any article related to this.
Plz help me. Its urgent...

CA. Subhash Dangi

CA. Subhash Dangi (Expert)

04 October 2012 As per Section 194A of IT Act, the provision of TDS is not applicable:

Any interest or such income credited or paid to—
(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or
(b) any financial corporation established by or under a Central, State or Provincial Act, or
(c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or
(d) the Unit Trust of India established under the Unit Trust of India Act, 1963,or
(e) any company or co-operative society carrying on the business of insurance, or
(f) such other institution, association or body 20[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)

04 October 2012 If the financial instituation is incorporated under the central/state/provincial act then TDS will not attract otherwise it is applicable.
TDS is also applicable if interest is paid to an NBFC.