What are provisions under I T Act which prescribes for TDS on interest?
Section 193 and 194A are tow section which prescribes for TDS on interest . Section 193 is for \'TDS on interest on securities\' and sec. 194A is for \'TDS on interest other than interest on securities\'
What is the meaning of interest for the purpose of TDS?
As per section 2(28) of the I T Act, interest is defines as under:

(28A) interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised ;

As per section 2(28B ) of the I T Act,interest on securities means

(28B) interest on securities means,

(i) interest on any security of the Central Government or a State Government ;

(ii) interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act ;

Therefore, almost all kinds of interest chargeable to tax is under TDS liability.

What is the basic exemption limit upto which no TDS is made?
The basic exemption in case of interest on securities paid by Government ,State government, corporation, RBI etc who deduct tax u/s 193 is RS 2,500 of aggregate interest paid or credited in a year.

In case of interest other than interest on securities (covered u/s 194A ) , the basic exemption is Rs 5000 in a year. However, in case of Banks or Co-operative societies or deposits with Indian publicly held companies , the limit of RS 5,000 is counted branch wise.

When No Tax is required to be deducted?
When interest is paid or credited to

1. A banking company
2. A cooperative society engaged in the banking operation
3. Financial corporation setup by Central , State
4. LIC, UTI or any insurance company or co-operative society
5. Any institution or body notified for non deduction of tax at source.
6. partner by Firm on partner\'s capital.
7. A member of cooperative society where payer is cooperative society.
8. Interest in NSC,KVP or Indira Vikas Party
9. A depositor with primary agricultural society or cooperative for land mortgage.
10. Any interest paid on Refund from Income tax department or under Direct Tax laws.
11. Interest credited to NRE Account.
12. Interest on recurring deposits or savings account with banks or cooperative society.
13. Any interest paid on compensation amount awarded by Motor Vehicles Claims Tribunal where aggregate of interest does not exceed Rs 50,000.
14. Any interest paid by infrastructure capital company or fund or a public sector company on Zero coupon bond issued after 1-6-2005
15. In case declaration filed in form 15G or Form 15 H.

Want to know the difference between 15 G and 15H?
Read this posting.

What Is The difference between 15G And 15H forms.

Also read What Are the Types Of TDS For Which Form 15G or 15H Can Not Be Filed?

Is there other way to get exemption from TDS on interest other than 15g or 15 H?

Yes ,section 197 read with Rule 28 and 28 AA provides that any person to whom interest is payable , can make application in Form 13 to A.O for authorizing the deductor to either deduct the tax at NIL rate or at lower rate .