Section 194A of Income Tax Act

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%. However, there will be no additional education cess, surcharge, or SHEC besides the basic rates.

Here is a table to explain the rate distribution.

Payment Made By

Rate of TDS

Lending Institutions (with PAN)

10%

Lending Institutions (without PAN)

20%

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

Note that the deduction limit for banks is ₹10,000 for banks and ₹5,000 for other financial institutions.

For instance, a bank pays ₹20,000 interest on a fixed deposit to a customer. Since this amount is more than the threshold of ₹10,000, the bank is liable to deduct TDS at 10% on the interest payable, i.e. ₹20,000. TDS is also applicable even if the amount is only credited to the customer account.

What Is the Deadline for Section 194A Deposit?

Frequently Asked Questions