The Finance Department has written to all heads of banks in the State asking them not to deduct tax at source on the interest earned on bank deposits of individuals belonging to Schedule Tribe in Meghalaya.
Commissioner and Secretary Finance, Dr Vijay Kumar D in a letter to the Meghalaya Cooperative Apex Bank, State Bank of India and Meghalaya Rural Bank said that the new circular which mandated the exemption certificates be obtained from the appropriate officer of the income tax department, which is required to be submitted to the banks to be eligible for tax deduction at source, has caused confusion and distress to the customers in the State.
Kumar D said the state government is taking up the issue at the highest level in the Ministry of Finance with a request to the Central Board of Direct Taxes to issue necessary instructions to its officials that there should be no insistence on producing documents of income tax exemption upon fulfilment of the conditions laid down in Section 10 (26) of the Income Tax Act.
“Till clarity is received from the Centre and communicated to the banks, you are directed not to deduct tax at source on the interest earned on bank deposits of individuals belonging to Schedule Tribe in Meghalaya,” Kumar D said to the banks.
