TDS on Interest Other Than Securities Interest

TDS is required to be deducted on the payments. Hence TDS needs to be deducted on the interest other than interest on securities. Section 194A deals with the TDS on interest other than interest on securities.

This document covers

Applicability (Person responsible for deduction of TDS)
Rate of TDS
Threshold for deduction u/s 194A
Time of Deduction of TDS
Due Date for TDS Payment
TDS Returns

1. Applicability (Person responsible for deduction of TDS)

Any person other than individual/HUF whose total sales or turnover from the business does not exceeds Rs 1 crore in case of business and Rs 50 lakhs in case of profession are required to deduct TDS u/s 194A.
194A is applicable only on the payments made to Residents. It does not cover the payments made to Non-residents. Section 195 covers the payments to Non-Residents.

2. Rate of TDS

TDS is required to be deducted @ 10% on payments made to Resident Non-Corporate taxpayers and Resident corporate taxpayers.

3. Threshold for deduction u/s 194A

The threshold for deduction of TDS u/s 194A are as follows

S.No	Type of Payer	Threshold
1	If the payer is Banking company Co-operative society engaged in banking business Post office and interest is credited or paid in respect of any deposit under notified schemes	Rs 40,000 Note: if the Payee is Senior Citizen, the threshold is Rs 50,000
2	Any other person other than mentioned in Pt 1	Rs 5,000

Budget 2023 has introduced Mahila Samman Savings certificate 2023 which is a one time scheme available for 2 years i.e., from 01st April 2023 to 31st March 2025. However TDS u/s 194A is not required to be deducted on interest earned under this scheme as the interest will not exceed Rs 40,000

4. Time of Deduction of TDS

TDS u/s 194A needs to be deducted at the following times which ever is earlier

At the time of credit of amount to Payee
At the time of payment of amount to Payee

5. Due Date for TDS Payment

The due date for payment of TDS deducted u/s 194A is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30

6. TDS Returns

TDS Returns needs to be filed in Form 26Q for all persons except the individuals or HUF who are not liable to Audit.
TDS Return filing is Quarterly.
The due date for the TDS Returns are as follows
- April to June – July 31
- July to September – October 31
- October to December – January 31
- January to March – May 31
- Refer Tax Calendar for more information
TDS Certificates needs to be issued within 15 days from the date of filing in Form 16A

Note: Deduction of TDS on interest income accrued to Minor where both the parents have deceased.

Generally, TDS is required to be deducted on the parent’s name in respect of interest accrued to minor. But when both the parents have deceased, TDS needs to be deducted on the minor PAN unless a declaration is filed that TDS has to be given to another person