TDS is deducted @10% on interest income from fixed deposits, recurring deposits etc.
Who should deduct TDS?
Any company or bank who pays interest to a Resident must deduct TDS at the time of making payment.
Note: Individuals or HUFs dont have to deduct TDS.
However individuals or HUFs have to deduct TDS if they run a
- Profession where gross receipts are more than Rs 25lakhs
- Business where turnover are more than Rs 1crore
in the financial year immediately before the financial year in which interest is paid.
[these provisions have been laid down under section 194A of the income tax act]
No TDS shall be deducted on interest paid to MUDRA
The government has notified that no TDS shall be deducted on interest paid to MUDRA or Micro Units Development & Refinance Agency Limited.
As per CBDT notification [Notification No. 65/2016/F. No. 275/28/2015-IT (B)] dated 5th August 2016.
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