If I invest Rs 30,000 in a bank FD for a period of 18 months with a 9.5% rate of interest, will TDS be deducted when the FD matures?
How is TDS charged?loan rates
u/s 194A of IT ACT ,in case of interest payment (not being interst on securities) to a resident other than a company ,TDS is required to be deducted at the rate of 10% plus surcharge if applicable plus education cess .
However ,in case from interest from banks on fixed deposits ,no tax is required to be deducted if the amount of interest does not exceed Rs 5000.
The monetary limit for TDS is proposed to be raised to Rs.10,000/ in the budget 2007 wef from 1/06/2007
Tax has to be deducted at source at the time of credit of interest to the account of the payee or at the ime of payment therof,whichever is earlier.If credit is given to the account of payee or payment is made to him annually tax may be deducted annually at the end of financial year.
The payment made at the time of maturity will be net of TDS.
however in case the FD is for Rs30000 for 18 months @9.5% interest -the interest payment will be less than Rs 5000 .Hence NO TDS will be deducted.
How is TDS charged?
loan
Check this site:
http://incometaxdelhi.nic.in/taxsys/welc...|||TDS is charged at a rate of 10% of income every finacial year.|||Yes ! certainly Tax will be deducted at the time of maturity and infact the net amount alone will be given to the deposited. Ofcourse a TDS Certificate to be provided incase if the Depositer is an assese he can calim the amount deducted in his income tax declaration.|||Rates for TDS Rate Surcharge Cess Total
1) Capital Gains on Equity shares and equity oriented
Mutual fund sold on Recognised Stock Exchange:
i) Short term 10.00% 10.00% 2.00% 11.22%
ii) Long Term NIL NIL NIL NIL
2) Capital Gain on Mutual Fund and equity shares
other than 1) above
Short Term 30.00% 10.00% 2.00% 33.66%
Long Term 10.00% 10.00% 2.00% 11.22%
3) Capital gain on Other Assets
i) Short term 30.00% 10.00% 2.00% 33.66%
ii) Long Term 20.00% 10.00% 2.00% 22.44%
4) Interest on Bank Deposits 30.00% 10.00% 2.00% 33.66%|||Section 192 of the Income-tax Act, 1961: Broad Scheme of tax deduction
at Source from “Salaries” etc.
3.1 Every person who is responsible for paying any income chargeable under
the head “Salaries” shall deduct income-tax on the estimated income of the assessee
under the head “Salaries” for the financial year 2000-2001. The Income-tax is
required to be calculated on the basis of the rates given above and shall be deducted
on average at the time of each payment. No tax will, however, be deducted at source
in any case unless the estimated salary income including the value of perquisites,
for the financial year exceeds Rs.50,000/-. (Some typical examples of computation
of tax are given at Annexure-I).
3.2 Sub-Section (2) of Section 192 deals with situations where an individuals
is working under more than one employer or has changed from one employer to
another. It provides for deduction of tax at source by such employer (as the tax payer
may choose) from the aggregate salary of the employee who is or has been in
receipt of salary from more than one employer. The employee is now required to
furnish to the present/chosen employer details of the income under the head “Salary”
due or received from the former/other employer and also tax deducted at source
there from, in writing and duly verified by him and by the former/other employer. The
present employer will be required to deduct tax at source on the aggregate amount
of salary (including salary received from the former or other employer).
3.3 Under Sub-Section (2A) of Section 192 where the assessee, being a
Government servant or an employee in a Company, Cooperative Society, Local
Authority, University, Institution, Association or Body is entitled to the relief under
Sub-Section (1) of Section 89, he may furnish to the person responsible for making
the payment referred to in Para (3.1), such particulars in Form No.10E duly verified
by him, and thereupon the person responsible as aforesaid shall compute the relief
on the basis of such particulars and take into account in making the deduction incorporated by or under a Central, State or Provincial Act, and includes an institution
declared under Section 3 of the University Grant Commission Act, 1956 (3 of 1956),
to be University for the purpose of the Act.
3.4 Sub-Section (2B) of Section 192 enables a tax payer to furnish particulars
of income under any head other than “Salaries” and of any tax deducted at source
thereon, in the prescribed from (No.12C) vide Annexure II. Such income should not
be a loss under any such head or other then the loss under the head “Income from
House Property” for the same financial year. The person responsible for making
payment (DDO) shall take such other income and tax, if any, deducted at source
from such income, and the loss if any, under the head “Income from House Property”
into account for the purpose of computing tax deductible under Section 192 of the
Income-tax Act. It is, however, provided that this sub-section shall not in any case
have the effect of reducing the tax deductible except where the loss under the head
“Income from House Property” has been taken into account, from income under the
head “Salaries” below the amount that would be so deductible if the other income
and the tax deducted thereon had not been taken into account.
In other words, the DDO can take into account the loss from House Property
only for working out the amount of total tax to be deducted. While taking into the
account the loss from House Property, the DDO shall ensure that the assessee files
declaration in Form No.12C and encloses therewith a computation of such loss
from House Property.
3.4 (i) For the purpose of computing loss under the head ‘Income from House
Property’ in respect of a self-occupied residential house, the ceiling of deduction of
interest on borrowed capital invested in the acquisition or construction of a self-
occupied residential house has been enhanced to Rs.1,00,000/- w.e.f. assessment
year 2001-2002. However, the deduction on account of interest on loans can be
aviailed up to a limit of Rs.1,00,000, only if such loan has been taken for constructing
or acquiring the residential unit on or after 1.4.1999 and the construction or
acquisition of the residential unit out of such loan has been completed before
1.4.2003.
3.4 (ii) The essential conditions necessary for availing higher deduction of
interest are that the relevant loan must have been taken after 1.4.1999 and the
acquisition or construction of residential unit must be completed before 1.4.2003.
There is no stipulation regarding the date of commencement of construction.
Consequently, the construction of the residential unit could have commenced before
1.4.1999 but, as long as its construction/acquisition is completed before 1.4.2003,
the higher deduction would be available. Also, there is no stipulation regarding the
construction/acquisition of the residential unit being entirely financed by loan taken
after 1.4.1999. The loan taken prior to 1.4.1999 will carry deduction of interest upto
Rs.30,000 or Rs.15,000 or Rs.10,000 or Rs.5,000, as the case may be, depending
upon the year in which the loan was taken
Persons responsible for deducting tax and their duties:
4.1 Under clause (i) of Section 204 of the Act the “persons responsible for
paying” for the purpose of Section 192 means the employer himself or if the
employer is a company, the company itself including the principal officer thereof.
4.2 The tax determined as per para 7 should be deducted from the salary
u/s 192 of the Act.
4.3 Section 197 enables the tax-payer to make an application in Form No.13
to his Assessing Officer, and, if the Assessing Officer is satisfied that the total
income of the tax-payer justifies the deduction of income-tax at any lower rate or
no deduction of income-tax, he may issue an appropriate certificate to that effect
which should be taken into account by the Drawing and Disbursing Officer while
deducting tax at source. In the absence of such a certificate from the employee,
the employer should deduct income-tax on the salary payable at the normal rates:
Circular No.147 dated 28.10.1974.
4.4 According to the provisions of Section 200, any person deducting any
sum in accordance with the provisions of Section 192 shall pay, within the
prescribed time, the sum so deducted to the credit of the Central Government in
prescribed manner (vide Rule 30 of the Income-tax Rules, 1962). In the case of
deductions made by, or, on behalf of the Government, the payment has to be
made on the day of the tax-deduction itself. In other cases, the payment has to
be normally made within one week of the deduction.
4.5 If a person fails to deduct tax at source, or, after deducting, fails to pay
Page 7
5
the tax to the credit of the Central Government within the prescribed time, he shall
be liable to action in accordance with the provisions of Section 201. Sub-Section
(1A) of Section 201 lays down that such person shall be liable to pay simple
interest at eighteen per cent per annum w.e.f. 1.6.1999 on the amount of such
tax from the date on which such tax was deductible to the date on which tax is
actually paid. Section 271C lays down that if any person fails to deduct tax at
source, he shall be liable to pay, by way of penalty, a sum equal to the amount
of tax not deducted by him. Further, Section 276B lays down that if a person fails
to pay to the credit of the Central Government within the prescribed time the tax
deducted at source by him, he shall be punishable with rigorous imprisonment
for a term which shall be between 3 months and 7 years and with fine.
4.6 According to the provisions of Section 203, every person responsible for
deducting tax at source is required to furnish a certificate to the payee to the effect
that tax has been deducted and to specify therein the amount deducted and
certain other particulars. This certificate, usually called the TDS certificate, has to
be furnished within a period of one month from the end of the relevant financial
year. Even the banks deducting tax at the time of payment of pension are required
to issue such certificates. In the case of employees receiving salary income
including pension, the certificate has to be issued in Form No.16 which has been
prescribed under Board’s Notification No.S.O.148(E) dated 28.2.1991. A specimen
of the certificate is enclosed as Annexure.III. This certificate is to be issued on the
tax-deductor’s own stationery within one month from the close of the financial
year i.e. by April 30 of every year. If he fails to issue the TDS certificate to the
person concerned as required by Section 203, he will be liable to pay, by way
of penalty, under Section 272A, a sum which shall be Rs.100/- for every day
during which the failure continues.
4.7 According to the provisions of Section 203 A of the Income-tax Act, it is
obligatory for all persons responsible for deducting tax at source to obtain and
quote the Tax-deduction Account No. (TAN) in the Challans, TDS-certificates,
returns etc. Detailed instructions in this regard are available in this Department’s
Circular No.497 [F.No.275/118/87-IT(B) dated 9.10.1987]. If a person fails to
comply with the provisions of Section 203A, he will be liable to pay, by way of
penalty, under Section 272BB, a sum of upto Rs.5,000/-.
4.8 According to the provisions of Section 206 of the Income-tax Act, read
with rules 36A and 37 of the Income-tax Rules, the prescribed person in the case
of every office of Government, the principal officer in the case of every company,
the prescribed person in the case of every local authority or other public body
or association, every private employer and every other person responsible for
deducting tax under Section 192, from “Salaries” shall, after the end of each
financial year, prepare and deliver, by 31st May following the financial year, an
annual return of deduction of tax to the designated/concerned Assessing Officer.
This return has to be furnished in Form No.24. It may be notd that a copy of each
