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Exemption certificate for the trust

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vijay kumar gupta

RMG Internal Audit

30 Points Posted on 05 June 2012

Dear Sir/Madam,

An educational institute which is governed by "Trust" which is exempted from Income Tax having surplus fund in their hand have decided to make the Term deposit/ Fixed deposit say for 15-30 days but Bankers are deducting TDS on Interest due/paid against the said TDR/FDRs. Trustees decided to take exemption certificate in the name of Institute U/s. 197 of the Income Tax Act , but I.Tax department is allowing the same based on the calculation of Interest earned during Quarter & TDS deducted by Banks which seems not correct to get the certificate in each Quarter.

My simple question in this context is that " if the Institute is exempted under Income Tax Act" then why the I.Tax Commissioner can not give the Exemption certificate U/s. 197 for Interest Income against the F/D etc. without monitory ceiling (without calculating the expected Interest income & TDS thereon)????

Expecting the suggestion in the same matter.

Thanks & regards.

VIAJY GUPTA
(Kolkata)

Replies (1)

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Posted on 05 June 2012

Dear Sir,

The amount has to be deducted by the bank as they are bound to deduct the same even if the income is exempted or falls below threshold limit.

The thing to be considered is submission of Form 15G which will ensure non-deduction of tax. But these forms are filed for a particular period. When the document submitted is of the IT dept, they will compute your exact income for the [eriod and issue the same to you.

Hence, you will have to file separately for each income so that no tax is deducted.