Thiruvananthapuram: Farmers, teachers, pensioners - anyone who had put their hard-earned money in primary cooperative societies - need not worry about the fate of their savings. Even if tax has not been deducted from their monthly interest, there is no reason why honest ordinary depositors should fear.
“All the deposits that could be accounted for cannot be touched by the IT Department,” a top IT source said. The type of ‘common man’ funds that generally find its way into cooperative banks - provident fund, gratuity, pension, insurance money – come to these banks already taxed. The problem that could emerge is the failure or unwillingness of cooperative banks to deduct TDS on the interest income of above Rs 12,000 a month from the fixed deposit.
“Depositors in primary cooperative banks can ignore the danger as TDS is not applicable to them,” the IT source said. However, since 2015, TDS has been made applicable to district cooperative banks (DCBs). “Still, senior citizens (65 and above) will remain untouched. Even if they earn a monthly interest of Rs 15,000 or even Rs 20,000 on their fixed deposit there will be no TDS as they have a high exemption limit of Rs five lakh,” The IT source said.
But other ordinary DCB depositors with a far lesser exemption limit, and for whom TDS has not been exempted, could be asked questions. It is quite common for cooperative banks to advise clients to split their deposits between husband and wife, or among various ‘ghost’ identities, and then open accounts in different coop banks so that the monthly interest on each of these deposits are kept just below the TDS-inviting ceiling of Rs 12,000.
“This cannot be considered a major crime as their deposits are well accounted for. The issue is only with the interest on their deposits. At the most, these depositors will be asked to pay a minor penalty,” the IT official said.
However, ordinary citizens who have parked money generated in a land sale in cooperative banks without paying capital gains tax could be in trouble. “Such a person can file capital gains tax if there is time. If the sale had happened before two years, he can voluntarily pay tax. But the risk of penalty will be there,” the official said.
