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Oriental Bank Of Commerce Department of Information Technology Head Office, New Delhi

Manual for

Term Deposits



Manual for Term Deposits –Department of Information Technology, Head Office Page 1 of 5

9.1.1 The Bank has statutory obligation to deduct Income Tax at source at specified rates if the total interest paid/ payable during any financial year on all term deposits held by a person exceeds the amount specified (at present Rs.10, 000/- per year) under the Income Tax Act. However interest paid on Savings Bank account and Progressive Deposit account are exempted from deduction of TDS. The TDS should be deducted as per guidelines issued by the Government and circulated by Head Office from time to time except in cases where the depositor furnishes Form 15G/ 15H as applicable. Form 15G/ 15H with PAN duly quoted on the respective form (in duplicate) should invariably be obtained from the depositor at the time of opening of Term Deposit accounts.

9.1.2. Depositors must be sensitized about the IT provisions on TDS by adopting the following measures:

1. 2.

Display of TDS provisions prominently in branch premises. Educating customers about TDS provisions while accepting Term Deposits.


Advising depositors about requirement of submission of form 15G/ 15H with PAN duly quoted on the respective form along with deposit receipt. 4. Making form 15G/ 15H available at branches. 5. Issuing a consolidated certificate at the end of financial year giving details of individual’s tax deducted during the year. 9.1.3. Further, it should be ensured that the following information, which is printed, on the Term Deposit Receipt at the time of issuance is legible.

a) Maturity amount is subject to Tax Deduction at Source (TDS) as per Income Tax regulations. b) Facility of renewal with retrospective effect is not available to overdue deposit(s) after 14 days from the date of maturity. c) Separate Form 15 G/ 15H with PAN duly quoted on the respective form has to be submitted for each Financial Year to claim exemption from TDS as exemption will be available from the date of receipt till the end of Financial Year. 9.1.4. One copy of Form 15G/ 15H should be filed with the Jurisdictional Commissioner of Income Tax within 7 days of the succeeding month and one copy should be retained at the branch. These forms should be filed chronologically in an Era file and should remain in the custody of concerned officer.

Manual for Term Deposits –Department of Information Technology, Head Office Page 2 of 5

9.1.5. For details on TDS please refer to Chapter 2.

9.2. Issue of T.D.S. Certificate

9.2.1. TDS certificate should be issued in Form No. 16A within one month from the end of the month during which interest is credited or paid and where the interest provision is credited to the account of the depositor on 31 st March of the Financial Year, it should be issued by 7th June of the financial year.

9.2.2. In cases where more than one certificate is required to be issued for deductions made during the financial year, the bank may on the request of depositor, issue a single consolidated certificate towards tax deducted during the financial year by 30 th April.

9.3. TDS Deduction on Term Deposits with Anniversary Interest System 9.3.1 W.e.f. 01.07.2008, the Bank introduced system of applying interest on Term Deposit on anniversary quarters. As per anniversary quarters interest calculation system, the system applies the interest on TD a/cs on the day of completion of their respective quarters, e.g., if a deposit is opened on 25th June, the 1st interest application for that account would take place on 25th September, then on 25th December, and so on. 9.3.2. As per the revised guidelines, the provisioning of interest on these schemes would be done on every quarter end. However the Term Deposits issued prior to this date (opened in old schemes) will continue in the old system of interest applicatiosn where interest is applied on Financial Quarter end i.e. on 31 st March, 30th June, 30th September & 31st December. 9.3.3. The system of anniversary quarters interest calculation was discontinued w.e.f. 19.03.2009. However, the accounts existing under the ‘Anniversary Schemes’ were to be continued in the same schemes, until their maturities. 9.3.4. On Term Deposits issued under anniversary quarters interest calculation system, the CBS system, at the end of each financial quarter books the interest for the broken period, in a separate office a/c, named ‘Interest Accrued,

Manual for Term Deposits –Department of Information Technology, Head Office Page 3 of 5

9.3.5. As per the Bank’s requirement, the TDS is required to be deducted on accrued interest also as on financial year end i.e. in March. The system debits the ‘Advance TDS on Intt. Accrual a/c’ (with partition details) for paying the TDS calculated on accrued interest, the same is reversed at time of actual interest application by the system, as shown below.

(a) At time of accrual, transactions are: Dr.- Intt.Paid – Term Deposit (for intt.amt.) Cr.- Intt.Accrued – payable on deposit (for intt.amt.) And, Dr. - Advance TDS on Intt.Accrued (for TDS amt.) Cr. - TDS on term deposit a/c (for TDS amt.)

(b) At time of actual intt.application / closure, transactions are: Dr. - Intt.Paid – Term Deposit (for additional intt.amt.) Dr. - Intt.Accrued – payable on deposit (for provisioned intt.amt.) Cr. - TDS Parking A/c (for total intt.amt.) And, then, Dr. - TDS Parking A/c (for total aforesaid intt.amt.) Cr. - Advance TDS on Intt.Accrued (for TDS amt.deducted at time of accrual) Cr. - TDS on term deposit a/c (for residual TDS amt.) Cr. - Term Deposit, or, operative a/c (for net intt. amt.)

Manual for Term Deposits –Department of Information Technology, Head Office Page 4 of 5

(c) In case of refund of TDS before actual interest application transactions are: Dr. - TDS on term deposit a/c (for TDS amt.) Cr. - Advance TDS on Intt.Accrued (for TDS amt.) While authorizing such tran., the user need to enter the concerned TD a/c no. (which is visible in tran.particulars) into the partition details 9.3.6. The branches should remit the aforesaid TDS amount deducted at time of interest accrual in addition to TDS on the residual amount of interest deducted at the time of actual interest application , to Income Tax authorities as per system by 7th of the following month. The necessary changes shall be made in the system, and, the TDS certificate shall also be given to the customers accordingly, wherever applicable. This system would culminate into TDS deductions for five times, whereby showing 8 entries in the TDS certificates, in a particular financial year, in case, the deposit runs for the entire financial year.

9.3.7. The above process shall continue for the deposits opened under Anniversary Scheme between 01.07.2008 and 18.03.2009 till the time of their maturity.

Manual for Term Deposits –Department of Information Technology, Head Office Page 5 of 5

Tax deduction at source (TDS)