Tax on Interest from Savings Account

savings bank account interest is very much taxable. Tax should have been deducted. The pity is no body would like to penalise the banks. Look, they except very few, never issue TDS certifiactes in time.

Interest on BANK DEPOSITS is liable for TDS, though savings bank interest is taxable, but bank does not deduct tax on it.

bank is liable to deduct tax..

Deduction of income-tax at source from interest other than ``interest on securities''--Section 194A of the Income-tax Act, 1961--Extension of applicability to interest on time deposits with banks, etc.--Regarding

Circular No. 617
Dated 22/11/1991

https://www.knowledgebible.com/forum/showthread.php/2968-Income-Tax-Circulars-on-Section-194-of-Income-Tax-Act-1961/page10

 ref pt 4(d)  The new provisions are not applicable to interest on savings bank accounts.

TDS must be deducted by bank u/s 194A.

On thing I would like to tel you Mr. Seth, if u r earning interest on savings bank account for more than Rs.20,000 p.a.. u can invest the excess amount in any FD where u can get a high interest.U r blocking your own money man.
 

Thanks to all of you for sharing your responses.

Shouvik - that is my trading account, so I need to keep that money in savings acc for liquidity in trading. 

Thanks for all the details.!

TDS IS NOT APPLICABLE IN SAVING & RECURRING ACCOUNT INTEREST

Are you sure Mr. Kiyosh??? Please give the details with reasons.

It has clearly mentioned under section 194A (3) (viii) that TDS would not be applicable on bank depoists other than time deposits. Following is text of that provision :

(3) The provisions of sub-section (1) shall not apply—

[(vii)   to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act)

Since Saving bank interest is a demand deposits (and not the time deposit) as per banking regulation act, 1949, it is very much clear from the provision that there is no need to deduct TDS on Saving Bank interest.

Thanks and Regards,

Manoj B. Gavali

Now I'm a bit confused....from the responses of Mr. Kiyosh and Mr. Gavali..

Are you referring to only the bank action of NOt deducting the TDS??? i.e. the banks are correct in not deducting the TDS???

Or do you mean that interest earned on savings account is not taxable, so I'm not required to pay any tax on that??

Please let me know

Agree with Mr. Manoj. Simply speaking banks are not liable to deduct tax, however such income i.e. SB Interest is taxable.

TDS IS NOT TO BE DEDUCTED ON INTEREST PAID TO SAVINGS BANK A/C HOLDERS.

AS IT IS ITS NOT YOUR LIABILITY TO DEDUCT TDS AND ITS BANK'S LIABILITY.

SO IN SUCH CASE YOU ARE NOT A DEFAULTER. 

REGARDS

ANKUR CHHEDA

  ADVOCATE

9322254845

TDS SHOULD HAVE BEEN DEDUCTED ,INTEREST EXCEEDING RS 20.000 IF TDS IS NOT DEDCTED THE DEFAULTER IS BANK NOT THE ASSESSEE

U/s 194A interest on securities tds will deduct if interest amount more than 10000/-