Quick Summary
The Income Tax Department has reaffirmed the applicability of Tax Deducted at Source (TDS) provisions on interest income under the newIncome Tax Act, 2025, particularly in relation to the definition of "banking company." Background: TDS on Interest Under Section 194A Under the existing provision
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FAQ :
The Income Tax Department has clarified that there is no substantive change in the TDS provisions for banking companies under the new Income Tax Act, 2025, compared to the previous Act.
TDS on interest under the new Income Tax Act, 2025, is covered under Section 393(1) (Table: Sl. No. 5(ii)).
While the phrase 'including any bank or banking institution referred to in section 51 of the Banking Regulation Act, 1949' has been omitted from the definition in Section 402 of the new Act, the practical scope remains unchanged.
Yes, banks and eligible institutions are not required to deduct TDS on interest payments below the prescribed thresholds under Section 393(1) of the new Act.
The thresholds remain the same: Rs 50,000 for general cases and Rs 1,00,000 in specified cases such as for senior citizens.
No, depositors will continue to enjoy the same threshold benefits for TDS on interest income as they did under the previous Income Tax Act.
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