Tax deduction at source on interest: immediate bank discounting avoids withholding, agency receipts require TDS on interest. If a usance bill/hundi is immediately discounted by a bank which advances the net amount, the bank acquires the bill and its payment to the supplier is a price, not interest, so no tax is deductible at source by the bank and the buyer need not deduct tax when paying the bank under the exemption for payments to banks. If instead the bank merely receives payment as agent and credits it to the supplier, any interest component is received for the supplier and the buyer must deduct tax at source from that interest even if routed through the bank.