Discrepancy in FD Maturity Payout from IndusInd Bank – A Case to Review

[desiviru]

I am puzzled! How does the bank benefit when rather than paying interest to the depositor (in the form of compounded interest) they are paying that amount instead to the Government every quarter? Yes, they don't have to pay further interest on that amount, but they don't have that money with the bank anymore to lend out either. It's like they don't have to pay interest on money that wasn't deposited with them!

The only benefit they have is having use of free money from the time of deduction from the depositor's account to the time they actually pay the money to the Government. It can be looked at this way also that that's a benefit they have at a cost to the Government who receive delayed tax.
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Had the Govt not asked for TDS on FD, banks would be paying more money out of their pockets,. What's confusing in that is beyond my understanding?

If you had to pay me Rs.10 for a Rs.100 I despoited but due to TDS you are finally paying Rs.9.50 who is saving this Rs.0.50? 1 ka TDS Govt ko chala gaya. Mujhe 9 ki bajay Rs.8.50 mila aur Rs.1 ka refund le liya. Mere pass 10 ki jagah 9.50 aaya.

TDS toh de diya bank ne Govt ko us TDS ki wajah se jo apna outflow interest ka kamm huya uska benefit customer ya Govt ko thodi jaa raha hai.

 

[psmangat5]

No brother

I am puzzled! How does the bank benefit when rather than paying interest to the depositor (in the form of compounded interest) they are paying that amount instead to the Government every quarter? Yes, they don't have to pay further interest on that amount, but they don't have that money with the bank anymore to lend out either. It's like they don't have to pay interest on money that wasn't deposited with them!

The only benefit they have is having use of free money from the time of deduction from the depositor's account to the time they actually pay the money to the Government. It can be looked at this way also that that's a benefit they have at a cost to the Government who receive delayed tax.
.

No brother once the tax is transferred in TDS account banks can't use it. So they don't have free money to use. Government is most clever customer.

 

[desiviru]

@dvader @Trust Me If you have time, you continue to bang your head with him as he continuously replying without even understanding the context we are talking about here.

I am done in this topic now. 🙂

 

[KGSIPO]

Following the hot discussion with lot of confusion 😴

 

[Trust Me]

No brother once the tax is transferred in TDS account banks can't use it. So they don't have free money to use. Government is most clever customer.

Huh?! Who said anything about free money after TDS is transferred to the Government?

Banks have use of free money from the time TDS is done (so no compounding, and consequently, no further interest payment on this amount) to the time the TDS is actually transferred to the Government at a later date.
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[Trust Me]

Had the Govt not asked for TDS on FD, banks would be paying more money out of their pockets,. What's confusing in that is beyond my understanding?

What is confusing is this:

Yes, banks would pay more money in absence of TDS, -- but that additional money would be due to the interest on the 'TDS' amount that was not needed to be transferred, so banks had full use of that money, just like any other deposit.

With TDS, that money goes to the Government, and is no more there with the bank as a part of a deposit that can be lent out, earning money for the bank to pay interest from. So, of course banks don't have to pay interest on the money they don't have with them anymore.

It beats me how that can be construed as beneficial to the banks. They didn't pay interest on the money they didn't have with them as deposit anymore. As simple as that!
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[NABNAB is verified member.]

Yes, it's necessary to check every interest credit and calculation manually for many banks nowadays. Have heard similar for the IDFC as well.

 

[Arnal07]

If you had to pay me Rs.10 for a Rs.100 I despoited but due to TDS you are finally paying Rs.9.50 who is saving this Rs.0.50? 1 ka TDS Govt ko chala gaya. Mujhe 9 ki bajay Rs.8.50 mila aur Rs.1 ka refund le liya. Mere pass 10 ki jagah 9.50 aaya.

Plz explain this calculation with details. How 0.50rs is going away???????