TDS @ 10% would be applicable on Recurring Deposits with effect from 1st June, 2015

With the amendment made in Section 194A in the Union Budget, 2015, the meaning of the word Term Deposits now includes Recurring Deposits. As a result of this amendment, TDS @ 10% would be applicable on Recurring Deposits with effect from 1^st June, 2015 which was earlier not deducted.

The TDS on Interest earned on Recurring Deposits would be the same as TDS on Interest earned on Fixed Deposits. The person receiving the interest on Recurring Deposits cannot claim any deduction on the same and the tax would be levied on the full interest amount as compared to Interest on Savings Account

All Banks and Financial Institutions have been mandatorily instructed to deduct TDS on all Interest Payments exceeding Rs. 10,000/- in any Financial Year. However, in cases wherein the Tax Liability of an Assessee is Nil and TDS on Interest is liable to be deducted for the reason that interest income exceeds Rs. 10,000/-, the Assessee can Furnish Form 15G/ Form 15H for Nil/Lower deduction.