Rates of TDS

Tax Practical
Practical TDS (Non Salary)

As per section 194A

TDS is to be deducted on Interest Paid By Others (On Loan) at 10%

However, No TDS is to be deducted if annual interest is upto 5000 per annum. If interest is 5001 then TDS is deducted.

TDS SECTIONS

 Section Description Cut off Individual/ HUF Other Section 194A Interest Paid By Others (On Loan) Rs. 5,000 P.A 10 % 10 %

Changes in 194A Due to Lockdown

However,Due to Lockdown,Government has temporarily reduced Rate by 25%

hence,TDS Rate on Interest Paid By Others(On Loan) is Changed as follows

 Current Rate New Rate (Temporary) TDS on Interest Paid By Others(On Loan) 10% 10%*75%=7.5%

Note - This New Rate is Temporary only if TDS Deducted form 14 May 2020 to 31 Mar 2021

After this old Rate will be applicable

On Interest Expense

We have to deduct TDS @ 10 % on Interest Paid/Payable

Cut off Rs. 5,000 i..eTDS is applicable if Interest paid is more than 5000 in one year

Only Applicable if loan taken from friends and Related cos

TDS not applicable if loan taken from Banks or Financial Institution

Interest on loan
Questions

Q.1

Loan taken from SBI Bank Rs. 5,00,000 @ 12% On 1 April whether TDS to be Deducted

Q.2

Solve Question 1 Assuming loan was Taken From Ravi and Co. ( Rs. 5,00,000 @ 12% for 1 Year)

#### New Amendment 1st April 2019

 Section no. Description Cutoff Rate of TDS Examples 194A Interest paid by Banks on FD/RD 10000 P.A. 40000 P.A. (From 1 April 2019)        (For Senior citizens 50000) 10% Savings bank interest not covered, only interest on fixed deposits and recurring deposits covered

On Interest Income

Bank deducts TDS @ 10 %

Cut off is Rs. 40,000 P.A

Only Applicable on Interest Income On Fixed Deposit (FD) and Recurring Deposit

Interest Income Questions

Question 1.

FD Made in HDFC Bank by transferring Money from HDFC Current Account

Of Rs. 100,000 @ 8 % P.A. For 1 year. Whether TDS To  be Deducted ? Pass entries

Question 2.

Solve Question 1 Assuming FD was of Rs. 10,00,000 @ 8 % P.A.

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