Tds applicability in case of interest paid on loan

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dheeraj kumar (Querist)
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01 November 2012 in a sole proprietor ship which is not required for audit under provision of Income Tax act, interest amounting to 90000 is being paid to 2 persons 45000 each

my query is whether i am liable to deduct or not. my lawyer is saying that if audit is not required then tds is not required
pl explain why it is so and justification for that

CA Manish

CA Manish (Expert)
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01 November 2012 As per Sec 194A(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :

Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.

Therefore in your case TDS need not be deducted.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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01 November 2012 TDS is not required to be deducted.

In case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the file is under Tax Audit in previous year, TDS is required to be deducted.

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