tds

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sri (Querist)
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14 July 2011 a partnership firm taken a loan from relatives with an interest @12%.
Q1) is it necessary to deduct tax(tds)for the interest paid?
Q2) if the firm taken a Form15g from the borrowers,.Can it be exempted from deduction
Q3) If the firm added the interest to the capital amount itself with out giving the cash to the creditors. then the firm should deduct tds or not?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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14 July 2011 Interest paid or credited by a partnership firm to its partners does not attract TDS.

Payment of interest to relatives will attract TDS if the interest amount is more than Rs 5000/- @ 10%.

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