LC Interest weather Applicable U/s 194A

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2010 Dear Experts,

Am also agree in ur stand, if our term Loan & working Capital Interest are our expenses, so we don't want to deduct any amount to pay by the way of interest.

But my doubt different,

U/S 194A Interest Other than Interest on Securities.

if i opened Letter of credit for purchase of raw material, instead of utilising OCC amount.

my vendor raise BIll of Exchange for material cost & Seprate Debit note raise for lc interest for usance period, our lc having conditions interest for usance period beared by opener's a/c. so vendor discounting lc with our bank with provisional invoice (ex. 90days before).

At the time of LC fall due we have paid to bank full amount.
weather i should deduct tds u/s 194A for LC interest amount or not.

if it Yes or No, pls clarify with provisions & exmple.

regards
Senthil Kumar.
SBQ Steels Limited.

M Prabhakar Menon

M Prabhakar Menon (Expert)

12 February 2010 Interest paid to banks/financial institutions do not come under the TDS provisions. This section applies to other payees who may recive interest in excess of Rs10,000/- a FY