Applicability of tds u/s 194(3)(iii) on int. paid to nbfcs

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This query is : Resolved

Sagar Bhadra (Querist)

14 June 2013 Section 194A(3)(iii) allows payment without TDS, if made to Notified Institutions, which includes Banking Company to which Banking Regulations Act, 1949 applies, LIC, UTI, etc.

But to my understanding section 194A(3)(iii) does not cover other financial institutions.
Is there any other relaxation available for such Interest payment?

As we all know that Interest (Other than Interest on Securities) is liable for TDS u/s 194A
The repayment of such financed amount are made in EMI, which includes principal+Interest. Such Interest normally crosses Rs.5000/- in a year.

So whether TDS is applicable on Interest payment made to such institutions?

Can any one throw some light on above issue.

Thanks in anticipation,

Regards,
Sagar Bhadra

Rupesh Jain

Rupesh Jain (Expert)

14 June 2013 it is not a schedule bank.
then you have to deduct tds on intt payemnt

Ganeshbabu K

Ganeshbabu K (Expert)

14 June 2013 Yes.TDS @10% under section 194A is applicable..on interest paid to NBFC.

1)if not paid tds interest will be disallowed sec.40(a)(ia)

2)You can pay TDS from your company pocket and generate form 16A for the tds deducted and paid to the credit of government.

3)you can claim tds amount paid on behalf of NBFC on production this tds certificate.

Thanks& regards
Ganeshbabu k

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