Tds on interest


Dear All

Please clarify me Minimum amount of TDS on Interest exemption is Rs.5000 or Rs.10000.

Ours is Non Banking Finance Limited Company.  Advance Thanks for reply. If any notification is there please forward me.

 

Mohan

harismohan@gmail.com

 
Reply   
 
FIN

 

 

The Times of India
Budget 2012
Mukherjee said small taxpayers with income up to Rs 5 lakh and interest from savings account up to Rs 10,000 would not even be required to file returns. However, the benefit can be taken by any individual irrespective of their tax limit.

To earn an interest income of Rs 10,000, one will have to invest Rs 1,42,857 at 7% interest rate. As the RBI has freed the cap on interest that can be offered on savings account, banks are offering a higher rate, some as high as 7%. Now that this income is tax free, it offers an attractive return comparable to and sometimes even better than a fixed deposit. Normally, a bank would offer around 9% interest on FD. But if one is in the highest tax bracket, the net income from the fixed deposits post tax will be 6.30%. But if a person's income is in the 20% slab, the net income post tax will be 7.2%. It will be 8.1% in the 10% tax bracket. Therefore, the person in the highest tax bracket will be better off if he keeps his money in a savings account.

The exemption will be available to deposits with a co-operative society, including a co-op land mortgage bank, a co-op land development bank, and a post office.

Budget 2012

Budget News 2012

 
Reply   
 



In case of Banking Company Limit is 10,000/- and in other case limit is 5,000/-

 
Reply   
 
ADVOCATE

The relevant provision is Section 194A of the Income Tax Act 1961.

As per S.194A(3) no tax need be deucted -

 

(i)  where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, [does not exceed—

(aten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);

(b)  ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;

(c)  ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and

(dfive thousand rupees in any other case]:]

[Provided that in respect of the income credited or paid in respect of—

(a)  time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or

(b)  time deposits with a co-operative society engaged in carrying on the business of banking;

(c)  deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes 27[and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] 28[***],

29[* * *] the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be;]

 (ii)  30[***]

(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

(c)  the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or

(d)  the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e)  any company or co-operative society carrying on the business of insurance, or

(f)  such other institution, association or body 31[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify32 in this behalf in the Official Gazette;

33[(iv)  to such income credited or paid by a firm to a partner of the firm;]

(v)  to such income credited or paid by a co-operative society 34[to a member thereof or] to any other co-operative society;]

35[(vi)  to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified36 by it in this behalf in the Official Gazette;

37[(vii)  to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(viia)  to such income credited or paid in respect of,—

(a)  deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank;

(b)  deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;]

38[(viii)  to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);]

39[(ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees;]

40[(x)  to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company 41[or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company 41[or scheduled bank].]

 
Reply   
 

LEAVE A REPLY


    

Your are not logged in . Please login to post replies

Click here to Login / Register  



 

  Search Forum








×

Menu

Post a Suggestion for LCI Team
Post a Legal Query
CrPC Course!     |    x