TaxTMI 
TaxTMI 
Deduction of income-tax at source from interest other than ``interest on securities''--Section 194A of the Income-tax Act, 1961--Extension of applicability to interest on time deposits with banks, etc.--Regarding
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....on, contained in clause (vii) of sub- section (3) of section 194A, hitherto related to interest- income credited or paid in respect of deposits with, (i) a banking company to which the Banking Regulation Act, 1949, applied, or (ii) a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank). 3. The Finance (No.2) Act, 1991, has, however, substituted the aforesaid clause with the following clauses with effect from 1st October, 1991:-- "(vii) to such income credited or paid in respect of deposits (other than time deposits) with a banking company to which the Banking Regulation Act, 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) 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. Expl....
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....reon, which is at present 15% of such income-tax (thus, the rate of tax deduction will be 23%). 6. No deduction of tax under certain circumstances.--There will, however, be no deduction of tax at source provided the amount of interest income does not exceed Rs.2,500 during a financial year. (This is in terms of the provisions of clause (i) of sub-section (3) of section 194A). The limit of Rs.2,500 is to be worked out with reference to the aggregate of the amounts of interest income credited or paid or likely to be credited or paid during a financial year by a payer to a payee. For the current year the banks will have to take into account the amount of interest paid or credited during the entire period of the financial year 1991-92, and not only the interest paid or credited after the 1st October, 1991. 7. There will also be no deduction of tax at source where the recipient of the interest income, being a resident individual, furnishes a declaration in writing, in duplicate, in Form No.15H, to the effect that the tax on his estimated total income of the relevant financial year will be nil (provisions of section 197A of the Income-tax Act refer). This declaration is to be furnished....
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....y person deducting tax in accordance with the provisions, inter alia, of section 194A, shall pay, within the prescribed time, the tax so deducted to the credit of the Central Government. In the case of deduction by or on behalf of the Government, the tax is required to be paid on the day of the deduction itself. In other cases, generally, the payment is to be made within one week of the last day of the month in which deduction is made. In special cases, the Assessing Officer, with the approval of the Deputy Commissioner, can also permit a tax deductor to pay the income-tax deducted at source on quarterly basis. For this purpose, a consolidated application may be made by the head office of the bank on behalf of all its branches to the concerned Assessing Officer. The Assessing Officer can also grant a consolidated permission in respect of all the branches of the concerned bank. Once such a permission is granted, it will not be necessary for each branch of the bank to obtain separate permission in its case. If a person fails to deduct tax at source or, after deducting, fails to pay it to the credit of the Central Government, he shall be liable to action under the provisions of secti....
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.... shall be liable to pay, under the section 272BB of the Income-tax Act, by way of penalty, a sum which may extend to Rs.5,000. 14. According to the provisions of section 206 of the Income-tax Act, read with rules 36A and 37 of the Income-tax Rules, the principal officer in the case of every company, the prescribed person in the case of every local authority or other public body or association and every other person responsible for deducting tax under the provisions of Chapter XVII of the Income-tax Act (which includes section 194A) shall, within the prescribed time after the end of each financial year, prepare and deliver, or cause to be delivered to the prescribed income-tax authority, the annual return of deduction of tax at source. The return in respect of tax deducted at source under section 194A is required to be filed by 30th day of June (following the financial year) in which the tax is so deducted. The annual return has to be filed on Form No. 26A. If a person fails to furnish in due time the annual return, he shall be liable to pay, under section 272A of the Act, by way of penalty, a sum which shall not be less than Rs.100 but which may extend to Rs. 200 for every day dur....