In this part of the TDS series, we’ll learn in-depth about
As we all know that “Interest” or simply “Byaaz” is a very wide term, it can include anything like interest paid on loan from friend/ relative or interest paid by the bank on fixed deposits, interest on debentures. Section 194A, specifically excludes “interest on securities”. This means, any interest in security (issued by the government) and interest on debentures/securities (issued by the company a corporation or local authority). So, let’s dive in and understand the provisions related to Section 194A.
TDS is to be deducted at 10% on the amount of interest credited under section 194A. It is deducted either at the time of payment(via cash, cheque, draft etc) or credit whichever is earlier.
The person (company, firm, AOP/BOI etc) who is paying the interest amount (i.e. payer) is responsible to make the deduction of tax before releasing the payment. However, an individual or HUF is not required to deduct TDS(but will be required to deduct tax if they are liable to audit u/s 44AB).
There are special situations where TDS u/s 194A is not required to be made. Some relevant ones are enlisted as follows:
Interest received is shown under the head “Income from other sources” and added in total income of the assessee. However, interest received from bank is eligible for deduction under 80TTA and 80TTB.
All of us loves “dividends”. Many of us, our friends, relatives etc buy shares of big companies with the aim to earn good returns in the form of share price hikes as well as dividends. The dividend is simply an equity (and preference) shareholders profit share in the company and section 194 calls for the deduction of tax on such dividend income given to shareholders.
A principal officer of a company, which is in the process of declaring dividends (equity or preference or both) in India, is required to deduct tax on dividend covered in the sub-clause (a) or (b) or (c) or (d) or (e) of clause 22 of section 2. But from 1.4.2003, this provision of TDS will only be applicable on dividend as per section 2(22)(e) as dividends covered u/s 2(22)(a) or (b) or (c) or (d) are exempt in the hands of the shareholders.
The rate under this section is 10%. TDS will be deducted at, time of payment(via cash, cheque, draft etc) or credit, whichever is earlier.
No tax deduction will be made u/s 194 in case of shareholder (who is an individual), when:
Dividend includes any distribution by a company of accumulated profits, whether capitalized or not if such distribution entails the release by the company to its shareholders of all or any part of the assets of the company.
Dividend includes any distribution made to the shareholders of a company on its liquidation, to the extent to which such distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not.
Dividend includes any distribution to its shareholders by a company on the reduction of its capital to the extent to which the company possesses accumulated profits, whether capitalized or not.
Dividend Includes- -Any payment by a company not being a company in which public are substantially interested -of any sum by way of loan or advance to be-
||Deemed as the dividend in the hands of the shareholder|
||Deemed as the dividend in the hands of concern|
||Deemed as Dividend in the hands of the shareholders|
Ans. Yes, TDS is deducted at the rate of 10% of the interest earned from the bank, if the interest income is more than Rs 10,000 in a year, however, Budget 2019 has increased this threshold to INR 40000. If the account holder has not submitted his or her PAN details, the rate of Tax deduction at source by the bank will be 20% of the interest charged.
Ans. NO, TDS is not applicable on EMI loan in case interest is paid to banks.. TDS is only required to be deducted if interest on loan is paid to other parties.
Ans. Yes, Tax deduction at Source is applicable on interest earned from savings account. The income from interest must exceed the limit of Rs 40,000 (As amended in Budget 2019) to deduct TDS at the rate of 10%.
Ans. Yes, tax deduction at source is applicable when interest is paid by others on loan at the rate of 10%.
Ans. The person or a company who pays the interest amount, deducts tax deduction at source before releasing the payment.
Ans. Yes, Tax deduction at Source is applicable on interest earned from savings account. The income from interest must exceed the limit of Rs 10,000 to deduct TDS at the rate of 10%.
Ans. This is the duty of the buyer to apply tax deduction at source and deduct at the rate of 1% from the sellers amount. If you failed to do so, you can either pay TDS to Government from your pocket and add to your cost of the flat. Otherwise you can pay TDS to Government from your pocket and claim for refund from your seller showing Form 26QB.
Ans. If an individual wants to claim TDS of previous year he or she has to file an income tax return for that year. Even if the income is not taxable, but if TDS is deducted from your income, you have to file ITR for getting refund of your TDS amount.
Ans. If Form 26AS is not showing the deduction of TDS on your income, then the deductor has not deposited it with the government. In this condition,you are required to ask the deductor to pay the same to the government and file TDS return.
Complete guide covering all the basic tax related terms. So, that tax terms will not work as a road-stopper in your way!!
Comprehensive Guide containing all Information that you must know while filing of your ITR for FY 2018-19 (AY 2019-20).
Free Income Tax Calculator for Assessment Year (AY) 2018-2019 and AY 2017-2018 with new budget changes.
Calculate HRA exemption based on your salary for AY 2018-19. Make accurate calculations of HRA for employees.
Hire smartest eCA's to File Your Income Tax Return. CA Assisted Filing of ITR. File your Income Tax Return with confidence and ease.
Tax2win is an efiling portal to prepare and efile income tax return Online. Tax2win helps individuals to file their income tax return.