hamburger
×
Digit General Insurance Logo
Powered By Digit
mobile-img

Check Credit Score for FREE

Instant in 2 Mins. No Impact on Credit Score

desktop-img

What is Section 194A of Income Tax Act about TDS Payable on Interest Income

What is Section 194A in Income Tax?

Who Are Liable to Pay TDS Under Section 194A of Income Tax Act?

When is Tax Deduction Under Section 194A Applicable?

When Does Nil/Lower TDS Deduction Take Place?

What is Section 194A TDS Rate?

 

According to 194A of Income Tax Act, TDS is deduct ible at 10%.

If a recipient does not furnish his/her PAN to a deductor, then TDS is applicable at 20%.

Here is a table to explain the rate distribution.

Payment Made To

Rate of TDS

Assessees who have furnished PAN

10%

Assessees who have not furnished PAN

20%

Depending on these factors, individuals can understand the 194A TDS deduction limit and specification. 

Note that the deduction limit for banks is ₹50,000 for banks, post office and co-operative societies. It is ₹5,000 for other financial institutions.

For instance, a bank pays ₹70,000 interest on a fixed deposit to a customer. Since this amount is more than the threshold of ₹50,000, the bank is liable to deduct TDS at 10% on the interest payable, i.e. ₹70,000 . TDS is also applicable even if the amount is only credited to the customer account.

What is the Deadline for Section 194A Deposit?

FAQs about Section 194A of Income Tax Act