TDS
This query is : Resolved
18 August 2009
I WANT TO KNOW THAT , a Pvt. ltd. PAYING RS. 32 thousand AS INTEREST TO INDIA BULLS FINANCIAL SERVICES LTD. ON Unsecured Loan.
PLS CONFIRM ME, WHETHER pvt. ltd. WILL DEDUCT TDS ON ABOVE INTEREST.
PLS CONFIRM ME, WHETHER pvt. ltd. WILL DEDUCT TDS ON ABOVE INTEREST.
19 August 2009
No TDS is to be made
24 August 2009
Can i know what is bais of no tds of above question ?
27 July 2025
Regarding the question on whether a Pvt. Ltd. company should deduct TDS on interest paid to India Bulls Financial Services Ltd. on an unsecured loan:
---
### Relevant Points:
1. **Section 194A** of the Income Tax Act deals with TDS on interest other than interest on securities.
2. Interest paid on a **loan taken from a company** (like India Bulls Financial Services Ltd.) is generally **subject to TDS @10%** (if interest exceeds ₹5,000 in a year) under Section 194A.
3. However, if **India Bulls Financial Services Ltd. is a Non-Banking Financial Company (NBFC) registered with RBI**, **then TDS on interest payable to them is applicable at 5% under Section 194LC or 194LD** (if conditions are met, like foreign currency loans or specified infrastructure bonds).
4. If India Bulls Financial Services Ltd. is **not registered as a financial institution or is a non-resident** entity, different provisions may apply.
5. In normal cases, **TDS is deductible by the Pvt. Ltd. company** paying interest on unsecured loans to any resident company if interest exceeds threshold limits.
---
### So why might the reply say “No TDS is to be made”?
* Possibly **due to lack of PAN** or **incorrect classification**.
* Or the interest amount might be below the threshold limit.
* Or the payer misunderstood the nature of the payment.
---
### Summary:
* **Usually, Pvt. Ltd. company must deduct TDS under Section 194A on interest paid on unsecured loan to another company if the interest amount is above ₹5,000 per year.**
* If India Bulls Financial Services Ltd. falls under special categories, other sections/rates apply.
* Clarify the nature of India Bulls Financial Services Ltd. and verify applicable TDS rules.
---
If you want, I can help check the exact nature of India Bulls Financial Services Ltd. and the correct TDS treatment based on updated tax laws. Would you like me to do that?
---
### Relevant Points:
1. **Section 194A** of the Income Tax Act deals with TDS on interest other than interest on securities.
2. Interest paid on a **loan taken from a company** (like India Bulls Financial Services Ltd.) is generally **subject to TDS @10%** (if interest exceeds ₹5,000 in a year) under Section 194A.
3. However, if **India Bulls Financial Services Ltd. is a Non-Banking Financial Company (NBFC) registered with RBI**, **then TDS on interest payable to them is applicable at 5% under Section 194LC or 194LD** (if conditions are met, like foreign currency loans or specified infrastructure bonds).
4. If India Bulls Financial Services Ltd. is **not registered as a financial institution or is a non-resident** entity, different provisions may apply.
5. In normal cases, **TDS is deductible by the Pvt. Ltd. company** paying interest on unsecured loans to any resident company if interest exceeds threshold limits.
---
### So why might the reply say “No TDS is to be made”?
* Possibly **due to lack of PAN** or **incorrect classification**.
* Or the interest amount might be below the threshold limit.
* Or the payer misunderstood the nature of the payment.
---
### Summary:
* **Usually, Pvt. Ltd. company must deduct TDS under Section 194A on interest paid on unsecured loan to another company if the interest amount is above ₹5,000 per year.**
* If India Bulls Financial Services Ltd. falls under special categories, other sections/rates apply.
* Clarify the nature of India Bulls Financial Services Ltd. and verify applicable TDS rules.
---
If you want, I can help check the exact nature of India Bulls Financial Services Ltd. and the correct TDS treatment based on updated tax laws. Would you like me to do that?
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