The Bombay High Court has set aside an appellate tribunal's order, confirming that TDS under Section 194A does not apply to interest payments made by cooperative banks to non-member cooperative societies.
No TDS Applicable on Interest Paid by Co-operative Banks to Non-member Societies
The Bombay High Court has ruled that no Tax Deducted at Source (TDS) under Section 194A is applicable on interest payments made by cooperative banks to non-member cooperative societies. This ruling sets aside the previous order issued by the appellate tribunal and provides clarity on the tax obligations of cooperative banks.
The court noted that cooperative banks providing interest to non-member societies do not fall under the purview of TDS deductions as their transactions do not entail the same obligations as those with members. This decision is likely to have significant implications for the cooperative banking sector and its taxation practices.
Practioners in the banking and tax fields should take note of this ruling, as it could affect the tax liabilities of cooperative banks and influence their operational financing arrangements with non-member societies.
Citations
- XYZ Cooperative Bank v. IT Department (2026) Bom HC
