“I am unable to express in words the shock I felt, when I came to know that an amount of rupees one thousand and odd has been deducted from my fixed deposit in a nationalised bank. “I am a senior citizen, with no pension. I very much depend on these savings for my day-to-day expenses and also for my medical bills. Last year, I paid a huge medical bill for an eye operation. My query is: (1) Should senior citizens also come under TDS over their meagre savings?; (2) How can any amount be deducted without prior intimation to the depositor? and (3) When a senior citizen does not come under the income-tax bracket, how can he be robbed of interest from his fixed deposit account. Will the Union Finance Ministry help me with an answer.”

Tax deduction has to be made from interest under Sec. 194A, when the payment exceeds Rs. 10,000 at the rate of 10 per cent. The fact that the recipient may be a senior citizen and/ or that his income is below taxable limit is not a matter of concern for the bank. In fact, banks have no authority to take such consideration into account and fail to deduct tax, except at the risk of loss of the tax so failed to be deducted along with interest and possible penalty for them. If the reader’s income falls below the taxable limit, there is remedy for the reader under the law. All that he has to do is to file Form 15H meant for senior citizens aged 65 years and above and Form 15G for others before interest becomes due. If it had been filed in time, tax would not have been deducted.

The reader can now file income-tax return for the year and get the refund of tax for which he is not liable. The complaint of the reader arises out of his ignorance and not on account of any high-handed action on the part of the bank as wrongly presumed by the reader. No prior intimation of tax deduction is necessary on the part of the bank.

S. RAJARATNAM