Sec. 194A Interest other than Interest on Securities

Sec 194A: Interest other than Interest on Securities  Who is liable to deduct tax? The person (other than an Individual or HUF) who is responsible for paying to a resident, any income by way of interest other than ‘Interest on Secutiries”, TDS u/s 194A to be made also by individuals & HUFs covered u/s 44AB Sec 194A: Interest other than Interest on Securities Rate of TDS : (F.Y 2010-11)  Resident – Non Companies: 10% [No S.C/E.C/SHEC]  Resident – Domestic Companies 10% [No S.C/E.C/SHEC]  In all cases – 20% - if PAN is not quoted with effect from 01-04-2010 [No S.C/E.C/SHEC]  Sec 194A: Interest other than Interest on Securities  When TDS is to be made ? At the time of payment of interest in cash or by issue of cheque or draft or by any other mode or credit of it to any account, whichever is earlier Sec 194A: Interest other than Interest on Securities Credit to any Account:  Whether called “Interest payable a/c.” or Suspense a/c or by any other name in the books of the Payer  Sec 194A: Interest other than Interest on Securities Interest as referred to in Sec 194A includes payments made in respect of ;  Intercorporate deposits/loans  Public Deposits  Loans  Late payment of bills  Payment by consignor to commission agent  Sec 194A: Interest other than Interest on Securities   Where no tax is to be deducted at source u/s 194A (i) If the aggregate amount of interest during the F.Y does not exceed Rs.10,000/- payable by a Banking company, Co-op.society engaged in banking business and post office (ii) If the amount of interest does not exceed Rs.5,000/- in any other case Sec 194A: Interest other than Interest on Securities     (B) In the case of the following Payees: (i) Banking Company or a Co-op Society engaged in banking business (ii) Financial Corporation established under a central, state or provincial Act (iii) LIC/UTI/ any Company or Co-op Society carrying on Insurance business / such other institution / association or body or their class as notified by Central Government in the Official Gazette Sec 194A: Interest other than Interest on Securities     (iv) Partner of a firm if the payer is firm (v) Member of a Co-op.society or any Coop.society where payer is a Co-op society (vi) Depositor of a notified scheme framed by Central Government Notified Schemes: Post Office R.D A/c./ Post office Time Deposits / Monthly income A/c / N.S.C / Kisan Vikas Patras/ Indira vikas patras Sec 194A: Interest other than Interest on Securities    (vii) Depositor with a Primary agricultural society or a primary credit society or a co-op land mortgage bank or a Co-operative Land Development Bank (viii) Depositor of a banking company or of a Co-op society engaged in banking business where Time deposits have been made before 17-1995 (ix) Any assessee where interest payable to him under direct tax laws Sec 194A: Interest other than Interest on Securities    (x) Interest credited to Non-Resident (External) A/c (xi) Interest on R.D & Savings A/c with banks or Co-op societies (xii) Interest on the compensation amount awarded by Motor Accidents claims Tribunal where the aggregate interest paid during the F.Y does not exceed Rs 50,000/- Sec 194A: Interest other than Interest on Securities  (xiii) Interest payable by an infrastructure Capital Company or Infrastructure Capital Fund or a Public Sector Company or Scheduled Bank in relation to a Zero Coupon Bond issued by such company or fund or Public Sector Company or Bank Sec 194A: Interest other than Interest on Securities  (C)Where Self declaration under Form No 15G is by a person other than a company or firm In the case of a senior citizen (65 years or more) the declaration should be under Form No 15H  Form No 15G /15H is not valid in the absence of PAN of the declarant & TDS to be made @ 20% Sec 194A: Interest other than Interest on Securities  (D) No TDS by the off-shore Banking unit from the interest paid: (i) On deposit made on or after 1-4-2005, by a non-resident or a person not ordinarily resident in India  (ii) On borrowing on or after 1-4-2005, from a non-resident or a person not ordinarily resident in India Sec 194A: Interest other than Interest on Securities  (E) Entities like Charitable Trusts, Scientific Research Associations etc., whose income is exempt U/s 10 on fulfillment of certain conditions – may apply for no deduction in Form No 13 Sec 194A: Interest other than Interest on Securities  (F) Certain Entities whose income is unconditionally exempt u/s 10 (Example: Funds or Authorities or Boards or Bodies, by whatever name called)  (G) On filing of certificate U/s 197 by the Payee Sec 194A: Interest other than Interest on Securities  Notes:  (i) TDS to be made on Investment in “Securitised Bonds”  (ii) TDS to be made on Bill Discounting Charges camouflaged as Finance Charges  (iii) TDS U/s 194A to be done on accrual basis every year, irrespective of the date of payment on maturity Sec 194A: Interest other than Interest on Securities  (iv)If Renewal of deposit is made retrospectively, TDS U/s.194A to be made from the date of renewal (on the interest payments)  (v) No TDS U/s 194A in respect of R.Ds  (vi)Deposits in Joint names – The limit of Rs.10,000/- should be seen only w.r.t the First Holder Sec 194A: Interest other than Interest on Securities    (vii) TDS U/s 194A to be made on accrual basis annually in respect of cumulative deposits (viii) TDS U/s 194A to be made on Interest on RFC deposits to Resident but not ordinarily Resident Persons, even if such income is exempt U/s 10 (ix) Form H should be available with the deductor before the payment or credit of interest Sec 194A: Interest other than Interest on Securities  (x) It is the responsibility of the deductor to forward Form 15G/15H to the CIT or CCIT within days, from the end of the month in which it is received – Failure to so may attract penalty U/s 272A(2)(f) @ Rs.100/for each day of default Sec 194A: Interest other than Interest on Securities  (xi) TDS U/s 194A to be made on the Gross Interest payable and not on the net interest after mutual setoff between the parties  (xii) Interest referred U/s 194A is not only Taxable but also any interest Sec 194A: Interest other than Interest on Securities    (xiii) False declaration in Form 15G/15H Prosecution U/s 277 (a) If the amount of tax involved is > Rs lakh, Rigorous imprisonment for a term which shall not be less than months but which may extend to years and with fine (b) In any other case, not less than months / which may extend to years and with fine Sec 194A: Interest other than Interest on Securities    xiv) Abetment of False return etc U/s 278: (Example: Bank Manager forwarding False Form No 15G to the CIT) - Same Penalty as in (xiii) above (xv) Trust making interest payments to Trustees who are assessed either in Individual capacity or representative capacity – TDS to be made since the Trust is not entitled to go behind the constitution and see the status of the beneficiary Sec 194A: Interest other than Interest on Securities  (xvi) A minor cannot file a declaration in Form No 15H  (xvii) Form 15H submitted after the year end (i.e 1st April) TDS should have been deducted The deductor violated the law and incurred the liability by not deducting before the year end (i.e 31st March) Sec 194A: Interest other than Interest on Securities   (xviii) TDS U/s 194A is to be made when interest is paid in pursuance to court orders Similarly, TDS is to be made on Interest payment on awards of other Tribunals like Motor Accidents Tribunal, Insurance Companies in delayed payments on settlement of claims (xix) TDS U/s 194A is to be made on Interest Payments to Canfin Homes (which are distinct from Banks) Sec 194A: Interest other than Interest on Securities  (xx) payer of interest not concerred with tax liability of payee  (xxi) Hire purchase agreements not loan – Not covered u/s 194A  (xxii) Interest paid by assessee along with loan repaid –TDS is a must u/s 194A  ... U/s 10 on fulfillment of certain conditions – may apply for no deduction in Form No 13 Sec 194A: Interest other than Interest on Securities  (F) Certain Entities whose income is unconditionally... Sec 194A: Interest other than Interest on Securities    (vii) TDS U/s 194A to be made on accrual basis annually in respect of cumulative deposits (viii) TDS U/s 194A to be made on Interest on. .. Sec 194A: Interest other than Interest on Securities  (xi) TDS U/s 194A to be made on the Gross Interest payable and not on the net interest after mutual setoff between the parties  (xii) Interest