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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Debt Products

Mr. Sunil Mehta, aged 45, a resident individual, has a bank fixed deposit that earns ₹50,000 interest in the year from a single bank branch. Assume the TDS threshold for non-senior citizens of ₹50,000 per year per bank applies, with TDS under section 194A at 10% only where interest exceeds the threshold. He has furnished PAN. What is the TDS deducted by the bank?

The bank deducts no TDS. The threshold for non-senior citizens is ₹50,000 and TDS arises only when interest exceeds it; exactly ₹50,000 does not. The interest is still taxable in his hands at his slab rate when he files his return.

  1. A₹5,000
  2. B₹2,500
  3. CNilCorrect
  4. D₹10,000

Explanation

TDS applies only where interest exceeds the threshold of ₹50,000 in the year. Interest of exactly ₹50,000 does not exceed it, so no TDS is deducted. The ₹5,000 option wrongly applies 10% to the full amount. The interest remains taxable in his hands at slab rate.

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