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Section 194A- TDS on Interest (Other than Interest on Securities)

TDS to be deducted on interest payable like interest on fixed deposit, interest on unsecured loan. Interest on securities are not covered under this section but covered under Section 193.

  1. Time of Deduction- TDS to be deducted at the time of payment or credit, whichever is earlier.
  2. Deductor-
    • Individual and HUF who are liable to audit under audit under section 44AB, point (a) and (b) in the preceding year.
    • All other assessees i.e Partnership Firm, Company, AOP, BOI
  3. Deductee- The payment of interest should be made to a resident. If payment is made to a non-resident, TDS shall be deducted under section 195.
  4. Tax Rate- TDS at a flat rate of 10% shall be applicable over the threshold specified below.

If PAN is not furnished, then tax to be deducted at a higher rate.

  1. Meaning of “Interest”:

“Interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized.

  1. Cases when TDS shall not be deducted-

In case of senior citizens, threshold of Rs. 50,000 shall apply instead of Rs. 40,000.

∼Authored by – CA Anushka Saraogi

Section 194 – TDS on Dividend

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