TDS on Sweep Accounts.

Question

I have a sweep account. The Bank automatically sweeps money beyond a certain limit to a separate FD Account. Bank pays higher interest rate for the same till it is withdrawn. The Bank also does TDS @ 10% and deposits to the Govt. I notice that there are more than 100 entries in the Form 16 A received from the bank which are ranging from Re 1 to various values.The total tax pad is just around Rs 650/= against an interest received of Rs 6500/= for the full year.

My questions are:-

a. Do I have to show this TDS and interest received in the IT Return which I am going to submit on line, shortly?(Rs 650/= has already been TDS and details are available against my PAN in the IT website).

b. I am already in the 30% Tax bracket. Do I have to pay the balance 20% of Interest (of Rs 6500/=).

c. If I have to pay the 20%, what is the last date? Does it involve any penalty?

d. what about individuals who are below the 10% tax bracket?

Pankaj Batra · Answer

You will have to show interest and TDS in your income tax return. TDS deduction does not mean you need not to report income. TDS is at a flat rate of 10%, whereas income tax applicability may be higher or lower for an individual. If you don't report this income, you would get income tax department notice as this income would be clearly visible in form 26AS.
You will have to pay remaining 20% income tax yourself as self assessment tax and then file income tax return. Income tax return form would automatically compute pending tax payable once you enter interest under income from other sources.
You will have to pay tax before 31st July. Failing to which, there may be additional penalty on pending tax. Now also, there is interest applicable u/s 234b and 234c as income tax has not been paid fully by 31st March. But as amount is less than Rs 10,000 interest penalty is not applicable.
Individuals who are below 10% bracket need to file income tax return and claim for refund of extra tax deposited. For such people, there is a provision of form-15G and form-15H submission to bank to avoid tax deduction.

TDS on Sweep Accounts.

1 Answers