Tds on interest

In case of Banking Company Limit is 10,000/- and in other case limit is 5,000/-

The relevant provision is Section 194A of the Income Tax Act 1961.

As per S.194A(3) no tax need be deucted -

(i)  where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, [does not exceed—

(a)  ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);

(b)  ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;

(c)  ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and

(d)  five thousand rupees in any other case]:]

[Provided that in respect of the income credited or paid in respect of—

(a)  time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or

(b)  time deposits with a co-operative society engaged in carrying on the business of banking;

(c)  deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes ²⁷[and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] ²⁸[***],

²⁹[* * *] the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be;]

 (ii)  ³⁰[***]

(iii)  to such income credited or paid to—

(a)  any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or

(b)  any financial corporation established by or under a Central, State or Provincial Act, or

(c)  the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or

(d)  the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e)  any company or co-operative society carrying on the business of insurance, or

(f)  such other institution, association or body ³¹[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify³² in this behalf in the Official Gazette;

³³[(iv)  to such income credited or paid by a firm to a partner of the firm;]

(v)  to such income credited or paid by a co-operative society ³⁴[to a member thereof or] to any other co-operative society;]

³⁵[(vi)  to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified³⁶ by it in this behalf in the Official Gazette;

³⁷[(vii)  to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(viia)  to such income credited or paid in respect of,—

(a)  deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank;

(b)  deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;]

³⁸[(viii)  to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);]

³⁹[(ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees;]

⁴⁰[(x)  to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company ⁴¹[or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company ⁴¹[or scheduled bank].]