Since no constructive credit to the depositor’s / payee’s account takes place while calculating interest on time deposits on daily or monthly basis in the CBS software used by banks, tax need not be deducted at source on such provisioning of interest by banks for the purposes of macro monitoring onl

Tax Deduction at Source on interest provisioning clarified: TDS not required on CBS macro monitoring entries; deduct on actual credit.

Where banks using Core Branch Banking Solution calculate and park interest on time deposits in a provisioning account for macro monitoring only, such parking does not constitute constructive credit to the depositor; therefore tax need not be deducted at source on those provisioning entries. Tax shall be deducted at source when interest is actually accrued, credited, paid, matured or encashed, or at periodic intervals as per bank or depositor practice, whenever aggregate interest in the year exceeds the statutory threshold for deduction.