Section 194A(3)(viia)(b) of the Income Tax Act
Income-tax Act, 2025: s.393
Section 194A(3)(viia)(b) falls under section 194A of the Income-tax Act, 1961, which corresponds to section 393 (Tax to be deducted at source) of the Income-tax Act, 2025.
Read section 393 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 194A(3)(viia)(b) is Bank Ltd. (supra), Saraswat Co-op. Bank Ltd. v. ITO (TDS) (54 Taxmann.com 297), cited in 76 of the 65 judgments on BharatTax that turn on this section.
Leading authorities on Section 194A(3)(viia)(b)
A multi-state cooperative bank is obligated to deduct tax at source on interest paid on fixed deposits placed by cooperative societies, as Section 194A(3)(viia) of the Income Tax Act, 1961, rather than Section 194A(3)(v), applies to cooperative banks in this context.
A cooperative bank is not required to deduct tax at source on interest paid on time deposits to a cooperative society.
A multi-state cooperative bank is obligated to deduct tax at source on interest paid or credited on fixed deposits placed by cooperative societies, as per Section 194A(1) read with Section 194A(3) of the Act, unless an exemption applies.
Convertible debentures (CCDs) continue to be classified as debt until they are converted into equity. During the pre-conversion period, interest paid on CCDs is treated as interest on debt, not as interest on equity.
A co-operative society mentioned in Section 194A(3)(v) of the Income Tax Act should be interpreted as a co-operative society other than a co-operative bank.
