Thursday, February 9, 2012

TDS on interest on time deposits by Banks

TDS on interest on time deposits by banks following Core-Branch Banking Solutions (CBS) software

         In the case of banks using Core-Branch Banking Solutions (CBS) software, no constructive credit to the depositor's/payee's account takes place while calculating interest on time deposits on daily or monthly basis.  Tax need not be deducted at source on such provisioning of interest by banks for the purposes of micro monitoring only.  In such cases, tax shall be deducted at source on accrual of interest at the end of each financial year or at periodic intervals as per practice of the bank or as per the depositor's/payee's requirement or on maturity or on encashment of time deposits whichever event takes place earlier;  whenever the aggregate of amounts of interest income credited or paid or likely to be credited or paid during the financial year by the banks exceeds the limits specified in section 194A. [Circular No. 3/2010, dated 2-3-2010]

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