Interest on vehicle loan to nbfc

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2014 we have paid interest on vehicle loan to NBFC without deducting the TDS, is there any exemption for non deduction of tax pls advise. Can assessing officer disallow this expenditure for nonpayment of TDS. pls advise how to tackle this issue

Ganeshbabu K

Ganeshbabu K (Expert)
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11 November 2014 1)In such cases we need to pay TDS from our pocket after filing of tds return if you provide tds certificate to NBFC they will will re-imburse it to you.

2)Yes,AO will disallow this expence if tds not done.And auditor also need to disclose the same in clasue 34 and clause 21(B)(ii)(A)

3)no need to disallowed if satisfies as below
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The FINANCE Bill 2012 has proposed to amend section 40(a)(ia) of the Income-tax Act to provide that disallowance of business expenses payable to resident payee due to non-deduction of TDS will not be made if the payer is not considered as an “assessee in default” under first proviso to section 201(1). As per first proviso to section 201(1), a payer who fails to deduct TDS from the amount paid to a resident or on the amount credited to the account of a resident shall not be deemed to be an “assessee in default”, if such resident:

(a) has furnished his return of income under section 139;

(b) has taken into account such sum for computing income in such return of income; and

(c) has paid tax due on the income declared by him in such return of income

and the tax payer furnishes a certificate to this effect from an accountant in such form as may be prescribed. In such a case, it shall be deemed that the payer has deducted and paid the tax on the date of furnishing of return of income by the resident payee.

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