The CBDT has issued Notification No. 06/2018 dated 06th December, 2018 by which important clarification has been provided on the issue of TDS deduction under section 194A of the Income-tax Act, 1961 in case of Senior Citizens
F. No. Pro DGIT(S)/CPC(TDS)/Notification/2018-19
Notification No. 06/2018
Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income-tax (Systems)
New DelhiNew Delhi, 06th December, 2018
Subject: – TDS deduction under section 194A of the Income-tax Act, 1961 in case of Senior Citizens – reg.-
It has been brought to the notice of CBDT that in case of Senior Citizens, some TDS deductors/Banks are making TDS deductions even when the amount of income does not exceed fifty thousand rupees. The same is not in accordance with the law as the Income-tax Act provides that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees. (Please refer to the third proviso to sub-section 3 of section 194A)
2. Under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Director General of Income-tax (Systems) is authorized to specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.
3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (5) of Rule 31A of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby clarifies that no tax deduction at source under section 194A shall be made in the case of Senior Citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees.
(Dewangi Marthak )
Asstt. Commissioner of Income-tax (CPC-TDS),
O/o the Pr. Director General of Income-tax (Systems),
New Delhi
The Finance Act 2019 as passed and assented by President of India stipulates there would be no tax if the total income does not exceed Rs. 5 lakhs. Similarly there is no tax deduction from interest on deposits if the aggregate interest amount does not exceed Rs.50000. If exceeded and if the total income is below the taxable limit (till now it is rs 250000) assessees may file form 15G / H as the case may be. But after 1-4-2019 the banks are still not implementing the basic exemption of Rs. 5 lakhs in place of present Rs. 250000 for accepting for filing form 15 G / H as the case may be and continuing to deduct tax without accepting the form 15 G / H. Is it the CBDT / Finance Ministry wished to do?
OFFHAND
Ostensibly , the Notification to avoid TDS has been issued in view of the entitlement for deduction of a maximum of fifty thousand rupees in terms of the newly inserted sec 80 TTB, in computing the SC’s gross total income w.e.f . 1-4-2019. In a case in which a SC who has such interest income from more than one bank or P.O. , however, the max. amount on which no TDS will be required is wrt the aggregated interest income. Prima facie, this aspect does not, as personally read and understood, seem to have been adequately taken into consideration in issuance of the subject Notification
Over to the CBDT for necessary clarification and follow-up corrective action, if so found fit and proper .
My wife is a senior citizen. She has 4 deposits in SBI and the total interest earned was less than 3 lakhs. In April she filed form 15H. During the year 2 of the deposits matured and by auto renewal process they were renewed. But in respect of renewed deposits of the same amounts the SBI has started deducting tax at source on these renewed deposits on the ground that the renewed deposits did not cover by the form 15H.
My question is that whether form 15H is for the total interest payments in a year by the principal payer or for each deposit / payment. I feel what the bank doing is incorrect. Section 194A read with form 15H speaks of total interest payments by that principal payer during the entire year and not with reference to each deposit / payment.
Fellow persons please discuss.
Another is that my son has 5 deposits with the same SBI and the total interest was just less than Rs.2.45 lakhs per annum. During the year 2 of the deposits matured and were auto renewal process renewed for higher rate of interest. by virtue of this higher rate of interest the gross interest crossed Rs2.5 lakhs. The bank has deducted tax at source on the total interest payments and that TDS part was reduced from one of the deposits. For instance if one of the deposit was for Rs.2 lakhs the cumulative tax for the earlier interest payments of the earlier part of the year amounting to rs. 12000 were deducted from the gross deposit of the Rs. 2 lakhs and displaying on net banking as Rs. 1.88 lakhs. My question can the Bank alter my deposit amount which is governed by another law. I feel that the bank could have recovered the TDS component from his SB account to which it is regularly crediting the interests. The SB account has always has more than Rs.20000 at any time of the period of the earlier period.
Please discuss since you might also have faced such similar instances.