Deduction of tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2014 34 A Pvt. Ltd. Co. is in course of taking loan from a
finance company named B. As per sanction letter
B will charge 2% of loan amount as processing fees.

When I required the mangement to deduct tds
on payment of such processing fees, it claimed
that they were making full payment to B without
deduction of tds since B will make repayment of
same.

Whether it is permitted in law to make payment
to B without deduction of tds on saying that B will
make repayment of same to A.

Please clarify on which ground it is permissible.

If B will make repayment of same, then why it
is mentioned in sanction letter that it will charge
loan processing fee @ 2%.

If you are of opinion that tds should not be deducted,
please clarify in which head payment should be
booked in books of A at time of making payment.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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03 December 2014 It is the usual practice to mention in sanction letter processing fees. For good customers it will be waived. If it is refunded no need to deduct TDS.
Book it under advances.

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