Section 194A TDS explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 194A covers TDS on Interest other than on securities (e.g. bank FD interest). This guide explains its rate, threshold and applicability.
Section 194A — rate, threshold & applicability
| Section | 194A |
| Nature of payment | Interest other than on securities (e.g. bank FD interest) |
| TDS rate | 10% |
| Threshold limit | ₹50,000 (banks, senior citizens higher) / ₹10,000 others |
| Who deducts | Banks, companies and others paying interest |
| Rate if PAN not furnished | Generally 20% (or the applicable higher rate) |
When Section 194A applies
- It applies to Interest other than on securities (e.g. bank FD interest)
- TDS must be deducted once the payment crosses ₹50,000 (banks, senior citizens higher) / ₹10,000 others
- The deductor is: Banks, companies and others paying interest
- A higher rate applies if PAN is not furnished by the payee
Example
A bank paying ₹60,000 FD interest deducts 10% TDS.
Points to note
- TDS is deducted at the time of credit or payment, whichever is earlier
- A higher rate applies if the payee has not furnished a PAN
- Non-filers may attract a higher rate under Sections 206AB/206CCA
- Always verify the latest rate, as thresholds are periodically revised
TDS compliance essentials
Whichever section applies, the core TDS process is the same:
- Obtain a TAN before deducting any TDS
- Deduct at the correct rate at the time of credit or payment, whichever is earlier
- Deposit the TDS by the 7th of the next month using the right challan
- File quarterly TDS returns (24Q/26Q/27Q) and issue Form 16/16A to the payee
- Verify deductions in Form 26AS/AIS and reconcile before filing
Related Section 194A guides
- How to Deduct TDS under Section 194A
- Section 194A TDS with Example & Due Dates
- Section 194A TDS Rate Chart
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