Interest on Recurring Deposits liable to TDS
Budget 2015 introduced TDS on interest on RD u/s Sec 194A. Any Interest above Rs 10,000 will attract TDS. Interest below Rs 10000 is not liable to TDS. If an Individual has multiple RD Accounts, then cumulative interest must be taken to determine this slab. This provision has also been extendede to FD as well. These Provisions are effective from June 1, 2015. There is no change in manner of taxability, yes cumulative interest was not liable to TDS earlier like now. However still form 15G/15H are applicable for those individuals whose income is below the basic exemption limit.
Any exemption or relief to rural banks or it is applicable to all banks including urban and rural?
In recent Budget, Nothing said about Rural or Urban Banks ie. Law makers have not differentiated b/w Urban and Rural Bank. It is said that Now It is required to deduct tax on interest on RDs by bank ( including Cooperative banks) if amount of interest exceeds Rs. 10000.
If I talk Sec 194A of Income Tax Act, It does not talk about Rural or Urban bank. TDS will be deducted in same manner as TDS is deducted on Interest on FD.