The Ministry of Finance on 17th September 2021 has relaxed the provisions of Income-Tax Act, 1961 Act in relation to the payment of interest regarding TDS by Scheduled Bank to a member of Scheduled Tribe (ST) community.
Section 10(26)(a), Income-tax Act, 1961 provides that a person is entitled to exemption from income tax if-he is a member of a Scheduled Tribe as defined in Article 366(25) of the Constitution.
Since the interest income of a member of Scheduled Tribe is exempt u/s 10(26) of the Act, the Finance Ministry has now notified that if payment of interest is made by a scheduled bank located in the specified area to a member of the Scheduled Tribe as referred to in section 10(26) shall not be subject to TDS under section 194A. This exemption from TDS under section 194A is available if the aggregate amount of interest payment does not exceed Rs. 20 Lakh in a previous year.
Further, the scheduled bank shall satisfy itself that the schedule tribe is a member, residing in any specified area, and the payment as referred above is accruing or arising to the tribe member as referred to in section 10(26) of the Act, during the previous year relevant for the assessment year in which the payment is made, by obtaining necessary documentary evidences in support of the same and the schedule bank shall report the above payment in the statements of deduction of tax as referred to in sub-section (3) of section 200 of the Act.
