BANKING AFFAIRS

Detailed explanation-1: -It will face a tax of Rs 31, 200 (tax rate of 30% and 0.4% cess). The TDS on FDs is 10% if the interest amount for the entire financial year exceeds Rs 10, 000 for AY 2023-24. In the interim budget 2019, this TDS deduction limit on FD has been increased to Rs. 40, 000 annually which is applicable in AY 2023-24.

Detailed explanation-2: -As per section 194A, no tax is to be deducted if the aggregate amount of interest during the financial year does not exceed Rs. 5, 000. Once the amount of interest exceeds Rs. 5, 000, then tax is to be deducted on the entire amount.

Detailed explanation-3: -Understanding TDS in relation to FDs If your interest income from all FDs with a bank is less than Rs 40, 000 in a year, the bank cannot deduct any TDS. The limit is Rs 50, 000 in the case of a senior citizen aged 60 years and above. Prior to Budget 2019, the limit of TDS on interest income was Rs. 10, 000.

Detailed explanation-4: -Small saving investments in post offices do not involve any tax deduction at source (TDS). It must be noted that the interest earned on these investments is added to the depositor’s total annual income in the year of receipt and is liable to be taxed as per the tax rate of the investor.

Detailed explanation-5: -In a scenario where, credit or payment to a contractor under TDS Section 194C is below TDS threshold limit of INR 1, 00, 000 in aggregate in a financial year and single transaction threshold limit INR 30, 000, TDS will not be deducted.