No Sec. 194A TDS on interest paid to resident of Scheduled Tribes areas specified u/s 10(26) Notification No. 110/2021, dated 17-09-2021

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no deduction of tax under section 194A

The Central Government has relaxed the provisions of tax deducted at source (TDS) under Section 194A on payment made to members of Scheduled Tribe residing in the specified area.

The Govt. has notified that no deduction of tax shall be made under section 194A on the payment in the nature of interest, other than interest on securities, made by a Scheduled Bank located in a specified area, to a member of Scheduled Tribe residing in any specified area, as referred to in section 10(26). However, the exemption is available subject to the fulfillment of the following conditions:

1) The Scheduled Bank satisfies itself that the receiver is a member of Scheduled Tribe residing in any specified area, and the payment is accruing or arising to, during the previous year relevant for the assessment year in which the payment is made. The bank is also required to obtain necessary documentary evidence in support of the same;

2) The Scheduled Bank reports the interest payment in the statements of deduction of tax as referred to in section 200(3); and

3) The payment made or aggregate of payments made during the previous year does not exceed Rs. 20 lakh.

Note:

1. Section 10(26) has list down following areas as ‘Specified Area’:

(a) Any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution;

(b) The States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura;

(c) The areas covered by notification no. TAD/R/35/50/109, dated the 23-02-1951, issued by the Governor of Assam under the proviso to paragraph 20(3) as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971; or

(d) The Ladakh region of the State of Jammu and Kashmir.

2. ‘Scheduled bank’ shall have the same meaning as assigned to it in clause (e) of section 2 of the Reserve Bank of India Act, 1934.

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