TDS

This query is : Resolved

CA. Santosh Jain (Querist)
Follow

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.

Chandresh Pitroda

Chandresh Pitroda (Expert)
Follow

19 August 2009 No TDS is to be made

CA. Santosh Jain

CA. Santosh Jain (Querist)
Follow

24 August 2009 Can i know what is bais of no tds of above question ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

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?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now