Interest income tax deduction applies at rates in force, with differentiated thresholds, branch-wise computation, and same-year adjustment mechanisms.

Section 393(1), Serial No. 5 requires tax deduction at Rates in force on interest on securities exceeding Rs.10,000 and on specified interest other than interest on securities. Bank, co-operative bank and notified Post Office interest has thresholds of Rs.1,00,000 for senior citizens and Rs.50,000 for others; specified-person interest has a Rs.10,000 threshold. Deduction occurs at the earlier of credit or payment. Thresholds may be computed branch-wise where Core Banking Solutions have not been adopted, and excess or short deduction may be adjusted during the same tax year.

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