applicability of 194A

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CA VIKASH AGARWAL (Querist)
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10 June 2011 if car loan takan from TATA Capital limited
and interest part included in EMI will be liable for deduct tds

Rakesh Jain

Rakesh Jain (Expert)
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10 June 2011 Dear Vikash,

As per my knowledge TATA capital ltd. is a financial corporation. And any amount paid as interest to such kind of corporation does not require to deduct the tax.

Please go through extrect of sec 194A given below :

194A.(1) Any person,not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income.....
...(3) The provisions of sub-section (1) shall not apply—.....
... (iii) to such income credited or paid to—

(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or

(b) any financial corporation established by or under a Central, State or Provincial Act, or

(c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or

(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e) any company or co-operative society carrying on the business of insurance, or

(f) such other institution, association or body [or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;

Hope above is helpful to you.

With Regards,

CA KRISHNA KUMAR DARUKA

CA KRISHNA KUMAR DARUKA (Expert)
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10 June 2011 Sorry I donot agree with Mr Rakesh Jain's view. Tata Capital is a company in private sector and not a financial institution established by or under a Central, State or Provincial Act. Therefore, TDS has to be deducted on interest part included in EMI.

One of my client also has taken vehicle loan from Tata Capital. Tata Capital refunds the TDS by cheque when quarterly Form 16A is submitted to them.

Rakesh Jain

Rakesh Jain (Expert)
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11 June 2011 Ok...If Tata Capital is not a financial corporation than only you have to deduct the Tax.
Tnx Mr. Daruka for updating my Knowledge.

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