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.




Cut off

Individual/ HUF




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

Section 194A TDS on Interest - Rates of TDS

Interest on loan


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

View Answer


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

View Answer


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 paid by banks.jpg

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

View Answer

Question 2.

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

View Answer


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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.