TDS on interest paid by banks on deposits of Co-op. Milk Federations, Educational Institutions, Charitable Trusts, trade unions, scientific research association, Local Authorities etc.
Provisions of TDS on interest u/s 194A(1) shall not apply in case of institutional depositors of the nature specified above under following circumstances:
- Interest paid /credited by Co-operative society (Bank) to any other co-operative society [Sec. 194A(3)(v)]
- Interest paid /credited to an entity whose income is unconditionally exempt under the Income Tax Act; [Circular 4/2002 dt. 16.07.02]
- Institution, association or body which the Central Govt. may notify in this behalf in the official Gazette; [Section 194A(3)(iii)(f)]
- In rest of the cases, on furnishing of certificate in form No. 13 [obtained from AO] by payee to the payer [S. 197 r.w. Rule 28 and Rule 28AB]
- Funds/ authorities/ Boards/bodies/institutions etc. whose income is unconditionally exempt under the Income-tax Act and who are statutorily not required to file return of income as per section 139 of the Income-tax Act are listed in CBDT Circular No. 18 of 2017 dt. 29.05.2017]
- Central Govt. Notified entities under section 194A(3)(iii)(f) of the Act: [Not. No. 170 dt. 22.10.70]
(i) any corporation established by a Central, State or Provincial Act;
(ii) any company in which all the shares are held (whether singly or taken together) by the Government or the Reserve Bank of India or a Corporation owned by that Bank; and
(iii) any undertaking or body, including a society registered under the Societies Registration Act, 1860 (21 of 1860), financed wholly by the Government.
Thus, if the payee falls in any of the above categories (a) to (d) above read with notes, it shall not be liable for TDS on interest income from payer.