The Government of India has been taking steps to simplify tax deduction methods and hene, TDS, i.e. Tax Deduction at Source came into the implementation. TDS is deducted at source of payments in terms of salary, commission, interest, brokerage, etc. In this answer I will cover Section 194A of Income Tax Act and tell you everything about it. Gear up to know what is sec 194A of Income Tax Act, who must deduct tax at source, and when can you avail exemption.
What is Section 194A of Income Tax Act?Section 194A of Income Tax Act states that the TDS is applicable on interest paid to the Indian resident (other than interest on securities).
Who should deduct TDS under sec 194A of Income Tax Act?The act clearly mentions that
Other than Hindu Undivided Family or Individuals, entities who pay the interest to resident Indian must deduct TDS under Section 194A.
If the gross receipt turnover of business or profession of HUF or Individual exceeds Rs. 1 cr and Rs. 50 lakhs respectively in preceding year, then they have to deduct TDS.
There are certain tax exemptions under sec 194A of income tax act. These are:
If the interest is paid by co-operative society to fellow members.
If the interest is paid to partners by partnership firms.
If the earnings are paid to bank institutions, Life Insurance Corporation Unit Trust of India, financial corporations or other companies engaged in the insurance business in India.
There are some prerequisites to get TDS deducted at lower or NIL rate. It happens only if:
The individuals declare their earnings in Form 15G and Form 15H of Section 197A.
The individual submits Form 13 to avail a certificate from the assessing authority.
I hope you have an understanding about section 194A of Income Tax Act now.
Know what is the difference between Section 54 and Section 54F of Income Tax Act Want to know how do I claim exemption under section 54? Check this out.Authors Of The Question
What is Section 194A of Income Tax Act?
Mandira
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2021-06-22T15:43:10+00:00 2021-06-23T10:24:55+00:00Comment
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