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TDS on cumulative deposit

Banks are not following any uniform procedure as regards tax deduction at source. In fact, many banks do not deduct tax from interest at all.

Some of them do it at the time of maturity, while they are required to deduct tax annually on the accrued income.

It is open to the taxpayer to offer such income either annually on an accrual basis or on maturity on cash basis.

Though the reader is helpless in the matter of tax deduction at source, he is not bound to report his income on a cumulative basis merely because tax is not deducted till maturity.

He can offer the income on an annual basis and pay tax but the refund of excess tax in the year of maturity will be available only in the year of tax deduction so that he may have to apply for refund for excess deduction, unless he is liable for advance tax, in which case, he can reduce advance tax payment correspondingly so as to avoid claim for refund.

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