No TDS on bank deposit interest for recipient under scheduled tribe category: Finance Ministry

Finance Ministry (Image: PTI)

Finance Ministry on September 17 notified that there will be no deduction of tax on bank deposit interest if the recipient belongs to a scheduled tribe.

"The Central Government in exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (“the Act”) notified that no deduction of tax shall be made on the following payment under section 194A of the Act, namely payment in the nature of interest, other than interest on securities, made by a Scheduled Bank (herein after the ‘payer’) located in a specified area to a member of Scheduled Tribe (herein after the ‘receiver’) residing in any specified area as referred to in s.10(26) of the Act," said the ministry in a release.

According to the ministry, the relaxation applies only if the payer satisfies itself that the receiver is a member of scheduled tribe residing in any specified area.

Also, if the payer reports the above payment in the statements of deduction of tax -- under sub-section (3) of section 200 of the Act -- then the relaxation will be provided. The most important aspect is that the payment made or aggregate of payments made during the previous year does not exceed twenty lakh rupees.