Share this page:

I. Circular

1.    CIRCULAR NO. 03/2010, dated 2-3-2010

The CBDT, has, vide its Circular No. 03/2010 dated 2-3-2010 , made a clarification on tax deduction at source on payment of interest on time deposits under section 194A of the Income-tax Act, 1961 by banks following core-branch banking solutions (CBS) software. It has been clarified that Explanation to Sec194A is not meant to apply in cases of banks where credit is made to provisioning account on daily/monthly basis for the purpose of macro monitoring only by the use of CBS software. It has been further clarified that since no constructive credit to the depositor’s / payee’s account takes place while calculating interest on time deposits on daily or monthly basis in the CBS software used by banks, tax need not be deducted at source on such provisioning of interest by banks for the purposes of macro monitoring only. In such cases, tax shall be deducted at source on accrual of interest at the end of financial year or at periodic intervals as per practice of the bank or as per the depositor's / payee's requirement or on maturity or on encashment of time deposits, whichever event takes place earlier, whenever the aggregate of amounts of interest income credited or paid or likely to be credited or paid during the financial year by the banks exceeds the limits specified in section 194A.

The complete text of the said circular can be downloaded from the link below:

http://law.incometaxindia.gov.in/dittaxmann/circular/Cir3_2010.pdf

II. NOTIFICATIONS

The CBDT has in exercise of the powers conferred by section 295, made the Income-tax (First Amendment) Rules, 2010, which would be effective from 1.04.2010.Rules 30, 31 and 31A of Income-tax Rules, 1962 have been substituted. The new rules 30 and 31 provide for the time and mode of payment to Government account of tax deducted at source or tax paid under section 192 (1A) and certificate of tax deducted at source or tax paid under section 192 (1A), respectively. Further, new Rule 37A on “Returns regarding tax deducted at source in the case of non-residents” has been inserted.

    Quick Links