Hello,

I hold FDs with quarterly interest payment option in ICICI bank. On 31 March 2015, TDS of rs.356 was deducted by bank and rs 356 is deposited with IT departartment as shown in my 16A form. But in June 2015, the 1st quarter of interest payment, bank during interest payment paid 365rs. less instead of just deducting TDS of 356rs.

On asking why 9rs. extra is deducted , bank gave me formulae mentioning:

Interest on TDS amount = TDS amount*Rate of Interest* No.of days left after 31st March for completion of quarter/ 365.

My queries:

1. As TDS on FDs was already deducted on 31 March 2015 by bank , how can bank charge this interest on TDS amount for the period April 2015 to June 2015?
2. If such formula exist, please share the Act no., or Section no. or name of government or RBI document which mentions this formula of interest on TDS by bank. I need this reference detail for proof.

Thank you,

Posted 4 years, 8 months ago by Tejaas Potdaar

There are 2 possibilities for deducting interest amount from Interest payable.

One could be that Bank did not pay TDS deducted to government and later paid with interest, so Interest which was supposed to be paid by bank was deducted from you account. This is wrong and should not be done by bank, you can talk with you bank and get the deduction back. However chances of this is very less.

Second and correct reason is explained below:

Banking softwares calculate interest on total interest accrued in your account, actual interest in your account accrued should be INTEREST-TDS, however the formula is possibly set to take interest amount as GROSS INTEREST instead of NET INTEREST.

In your account interest is paid on interest earned in last quarter, however because of software automatic calculation interest gets calculated on Gross Interest instead of Net Interest.

So, bank reverse the interest portion on TDS amount which was paid to government and was no longer in your account with bank.

Hope this solves you problem. However this is my theory, check with your bank whether second solution is the reason.

Posted 4 years, 8 months ago by CA Pulkit Sharma

Dear CA Pulkit,

Sir, I find your second opinion reasonable. As tax was deducted on 31st MArch 2015 and deposited on 30 April 2015 as indicated by form 16A. So no question of penal interest on TDS .

Considering your argument of Net and Gross, how can bank charge the interset for the period - April to June during which TDS amount is zero as 15H is submitted in April start. Bank could have charged it only for the no. of days of March month for which TDS was deducted. In our case our FDs started on 25 March 2015, so TDS was calculated form 25 to 31st March 2015.

I have asked for it but they dont have answer and have forwarded my complaint to senior officials.

Also is it necessary to submit 15H form everytime in a single year when new FD is made?

thank you,

Posted 4 years, 8 months ago by Tejaas Potdaar