Tds on interest on fd by bank

post the query clearly, as bank has to deduct TDS only when the gross interest exceeds 10000 per year, with the bank only.

Bank A(Co-Op bank) has put some money as FD with PSU bank.So is it required by the interest Paying PSU bank to deduct TDS on that interest.There is any specific exclusion for Interest on Intere Bank Deposits.?

if the deposit is governed by RBI rules for interbank deposits/transfers, then it will be under no TDS usually, but appears that bank has made deposit in individual capacity where no exemption is available under TDS.

No TDS will be deductible in your case as there is specific exclusion for any income paid to any banking co under section 194A(3)(iii)

Relevent extract od that section are reproduced below

(iii)  to 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