TDS
This query is : Resolved
Pankaj Gupta
(Querist)
16 July 2009
please advise whether TDS u/s 194C/Jis deductible on Finance charges to IDBI Bank Ltd.
Guest
Guest
(Expert)
16 July 2009
Finance charges is treated as contractor charges but if IDBI have appointed special persons like CA and totally professional thn in that case you should be treated as Professional.
As my opinion deduct TDS U/s 194C.
As my opinion deduct TDS U/s 194C.
taxindiaconnect
(Expert)
16 July 2009
I do not agree with both the above opinions expressed by the experts. Section 194A(3)(iii)(f) provides as in this regards that the Interest credited or paid to such institutions association or body corporate which the central govt. may for the reason to be recorded in writing notify be exempt from TDS. The Notified institution for this purpose are notified by various notifications issued by CBDT. For the list of such institution please see the page no 3.202 of taxmann master Guide to Income tax 18th Addition / 2008.
The definition of Interest has been provided in section 2(28A) of the Income tax Act as following .
"interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;
According to this definition the interest includes any service fees or other charges in respect of the money borrowed or debt incurred. An upfront fee paid to a bank is nothing but service charges paid to bank as service fees or other charges in respect of moneys borrowed.
Hence no TDS is applicable on such payments.
The definition of Interest has been provided in section 2(28A) of the Income tax Act as following .
"interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;
According to this definition the interest includes any service fees or other charges in respect of the money borrowed or debt incurred. An upfront fee paid to a bank is nothing but service charges paid to bank as service fees or other charges in respect of moneys borrowed.
Hence no TDS is applicable on such payments.
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