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 %


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

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

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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

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Question 2.

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

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  1. Tax Practical
  2. Practical TDS (Non Salary)

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.